The Bank of Japan maintained its monetary stimulus, but downgraded the inflation forecast signaling that price growth will not reach 2 percent target until March 2021.
The policy board of the BoJ voted 7-2 to purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.
The board retained the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.
The BoJ will conduct purchases of Japanese government bonds in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80 trillion.
The bank repeated that it will maintain the current extremely low interest rates for an extended period of time.
For the fiscal year 2018, real growth projection was trimmed to 1.4 percent from 1.5 percent, and inflation forecast to 0.9 percent from 1.1 percent.
Further, the bank downgraded its inflation forecast for fiscal 2019 to 1.9 percent from 2 percent, and that for fiscal 2020 to 2 percent from 2.1 percent.
The bank noted that the momentum toward achieving the price stability target of 2 percent is maintained, but is not sufficiently firm, and developments in prices continue to warrant careful attention.
The downgrade to the BoJ's inflation forecasts underlines that policy tightening remains a long way off, Marcel Thieliant, an economist at Capital Economics, said.
The BoJ will leave both its short-term policy rate as well as its 10-year yield target unchanged beyond 2020, the economist added.
Real GDP growth outlook for both fiscal 2019 and 2020 was retained at 0.8 percent.
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December 19, 2025 15:10 ET U.S. inflation data and interest rate decisions by major central banks were the highlights of this busy week for economics news flow. Employment data and survey results on the housing markets also gained attention in the U.S. In Europe, the European Central Bank and Bank of England announced their policy decisions and macroeconomic projections.