TOKYO -- Bank of Japan Governor Haruhiko Kuroda said Thursday the central bank will likely continue its ultra-easy monetary policy for well over another year, signaling it remains far from its price goal.
In a statement after a two-day policy meeting, the BOJ unexpectedly changed its forward guidance to say it will keep extremely low interest rates "at least through around spring 2020." The announcement sets a date on the duration of its current policy, having previously said it would continue for an "extended period."
Kuroda told reporters the move was intended to "clarify" its position of continuing monetary easing for the foreseeable future.
"It means that we will keep extremely low interest rates for quite a long time," he said. "It will be longer [than spring 2020], but not shorter."
The announcement signals the BOJ's concerns over Japan's economy. Kuroda said there is a "large downside risk" in its inflation outlook, and "uncertainty remains" over whether global economic growth will pick up later this year. Domestically, a planned consumption tax hike in October risks cooling consumer spending.
In its quarterly outlook report, also published on Thursday, the BOJ projected it would not reach its 2% inflation target for at least three more years.
Kuroda came to office in 2013 with a promise to hit the goal in about two years. Still far below 2%, the central bank last year dropped its time frame for the target, saying it would keep loose policy in place until the objective is met consistently.
The report said consumer inflation is projected to reach 1.6% in the fiscal year starting April 2021. Prices are forecast to rise 1.4% in fiscal 2020, down from the previous forecast of 1.5%. For the current fiscal year, inflation is expected to be 1.1%.
The BOJ decided to keep its short-term interest rates at minus 0.1% and reiterated it would strive to keep 10-year Japanese government bond yields around zero.
The central bank kept the pace of increase of its JGB holdings at 80 trillion yen ($715 billion) a year and that of exchange-traded funds at 6 trillion yen a year. The decision to stand pat was approved by a vote of 7-2.
Thursday's tweaks in forward guidance had little impact on financial markets, as most economists do not expect a rate rise in the next year. The Japanese yen was hovering at around 112 yen against the U.S. dollar. The benchmark Nikkei 225 stock index closed about 0.5% higher.