Bank of Japan officials see significant scope to boost government bond purchases if needed to achieve their inflation target, according to people familiar with the discussions, signaling little concern with perceptions of underwriting fiscal deficits.
The Bank of Japan will need to postpone the time-frame for achieving a 2 percent inflation target as it refrains from enlarging its asset-purchase program, economists forecast in a Bloomberg News survey.
The yen tumbled, reaching the weakest level in almost four years against the euro, as the Federal Reserve unexpectedly retained a monetary policy that prompts investors to borrow in low-interest-rate currencies to buy higher-yielding assets.
The Federal Reserve’s surprise decision to delay tapering stimulus as inflation remains subdued suggests Bank of Japan Governor Haruhiko Kuroda faces an uphill battle to stoke price increases with quantitative easing.
Takahide Kiuchi, the Bank of Japan board member most openly critical of its monetary policy, said the central bank may come under pressure to expand unprecedented easing, doing more harm than good to the economy.
Half a year after Bank of Japan Governor Haruhiko Kuroda unleashed record monetary easing, economists see the bank failing to meet its inflation target, underscoring the case for stronger steps to revive the economy.