BoJ cuts inflation forecast as oil prices tumble

The Bank of Japan held its monetary stimulus program unchanged as widely expected by the markets. After concluding a two-day policy meeting on Wednesday, the central bank also announced that it cut its inflation forecast for the nation. Falling oil prices are making it difficult for the BoJ to fight deflation in the world’s third-biggest economy.

The Bank of Japan said in a statement that it will increase its monetary base at an annual pace of 80 trillion yen while lowering its CPI (consumer price index) forecast to 1 percent for the fiscal year starting in April, from 1.7 percent.
Governor Haruhiko Kuroda is being challenge in meeting the BoJ’s 2 percent inflation target due to the risk of consumer prices falling this year as oil prices tumble.

The yen rose after the BoJ announcement, pushing USD/JPY back below 118.00 yen.

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