How BOJ’s Kuroda made last-minute proposal to keep his inflation target
TOKYO–The main purpose of the Bank of Japan policy board meeting Oct. 31 was supposed to be updating economic forecasts, not making policy changes.
But as board members submitted their forecasts, an alarming pattern emerged, according to people familiar with the BOJ’s thinking. Members were marking down their price projections, with at least one seeing inflation slipping below a 1% annual rate for the fiscal year starting next April.
Japan was headed a step back toward the deflationary environment the central bank had pledged to eradicate–and worse, it would have to admit so publicly.
Gov. Haruhiko Kuroda, who had said for months that his plan to create 2% inflation was on track, now floated shortly before the meeting an audacious proposal: The Bank of Japan should expand the inflation-boosting package it initially launched in April 2013 by as much as one-third. Mr. Kuroda hoped to prompt new, more upbeat, forecasts that would reflect the mammoth cash infusion into the economy.
