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The Bank of Japan kept monetary policy steady on Thursday but once again pushed back the timing for achieving its ambitious inflation target, reinforcing views that it will lag well behind other major central banks in scaling back its massive stimulus programme.
With robust exports and private consumption pointing to a steady though modest recovery, the Japanese central bank slightly raised its growth forecasts and offered a more upbeat view of the world's third-largest economy than last month.
But stubbornly weak price growth forced the BoJ to cut its inflation forecasts, underscoring the challenges the central bank faces as it tries to reflate the economy and coax consumers to spend more.
"Recent price developments have been relatively weak, as companies remained cautious in raising wages and prices," the BoJ said in a quarterly report on its long-term growth and inflation projections.
"Risks to the economy and price outlook are skewed to the downside," it said, conceding it had proved harder than expected to change public perceptions that deflation would persist.
The BoJ pushed back by a year the timing for hitting its 2 per cent inflation target, in a fresh blow to Governor Haruhiko Kuroda's radical monetary experiment aimed at sustainably ending deflation.
It now expects inflation will not reach that level until some time in the fiscal year ending in March 2020.
The BoJ has postponed the price target timeframe six times since Kuroda launched his huge asset-buying programme in 2013.
"The BoJ's hands are tied. Central banks in the United States and Europe are headed toward higher rates and balance sheet reduction, but the BoJ is headed in the opposite direction," said Hiroaki Muto, economist at Tokai Tokyo Research Centre.
"The message seems to be the BoJ is prepared to maintain easy policy indefinitely."
As widely expected, the BoJ maintained its short-term interest rate target of minus 0.1 per cent and its 10-year government bond yield target of around zero per cent.
The central bank also kept intact guidance that it would keep buying government bonds so its holdings increase at an annual pace of ¥80 trillion yen ($US714 billion).
Reuters