Investing.com - The Bank of Japan board Friday decided by an 8 to 1 vote to leave the bank's policy target unchanged, as largely expected, indicating policymakers are confident that the economy will rebound in the coming months and that the underlying trend of prices continues to rise.
In the semi-annual Outlook Report due at 0600 GMT, the BoJ is likely to lower its economic forecasts for this fiscal year and may also push back the estimated timing of achieving its 2% inflation target again to "around fiscal 2016" from "around the first half of fiscal 2016."
The most likely scenario is the board will trim its GDP forecast. So far, the BoJ's assessment of the two main drivers of inflation has been unchanged: longer-term inflation expectations are rising and the negative output gap is unlikely to hurt the underlying price trend, which is backed by tight labor supply, because the GDP slump in April-June was mainly caused by an export drop.
At Friday's one-day policy meeting, board member Takahide Kiuchi again proposed lowering the scale of the monetary base and Japanese government bond buying to ¥45 trillion. His proposal was again voted down by the rest of the board.