Japan's central bank revised down inflation forecasts on Tuesday, making only minor tweaks to a monetary policy that has so far fallen short of lifting prices and boosting the world's third-largest economy.
There was widespread speculation in the run-up to the Bank of Japan's two-day meeting that it would adjust its ultra-loose policy, seeking to offset the effects of negative interest rates and its massive bond and asset buying.
But the bank offered only marginal adjustments to its policy, introducing some flexibility, and revised down further its forecasts for inflation through fiscal 2020.
The BoJ has struggled for years to reach the 2.0 inflation rate thought necessary to turbocharge Japan's economy, and has defended its decision to maintain its monetary easing even as other central banks tighten policy.
Analysts said the bank had defied those expecting major shifts as a possible precursor to a tightening of policy.
“Despite the adjustment, the statement indicates the Bank of Japan is still sticking to the status quo,” said Masakazu Satou, senior analyst at Gaiame Online.
The bank has faced criticism for the side effects of its policy, including concerns that its massive purchases are skewing the bond market and financial markets.
In a nod to those concerns, it said it would seek to keep yields on benchmark 10-year government bonds around zero percent, but added “the yields may move upward and downward to some extent” and said it would “conduct purchases in a flexible manner”.
The bank also said it would shift its purchases of exchange-traded fund away from the Nikkei towards the Topix exchange, to address concerns it is inadvertently hiking stock prices, and could “increase or decrease the amount of purchases depending on market conditions”.