Central bankers also decided to maintain the BoJ's ultra-loose monetary policy at a time when their counterparts in other major economies from the Americas to Europe consider ending the era of cheap cash.

The bank said it now expects the core consumer price index to rise 1.1 percent in the year to March, down from its April estimate of 1.4 percent, while its March 2019 prediction was cut to 1.5 percent from 1.7 percent.

In a statement after the policy meeting the bank also said it now expects to achieve the two percent objective sometime in the year to March 2020.

Officials had originally set in 2013 a two-year timeline when unveiling the bank's massive monetary easing programme as part of Prime Minister Shinzo Abe's push to kickstart growth in the world's number-three economy.

"The BoJ has already pushed out the timeline several times. Now four years have passed, and there is no sign the inflation rate is rising," Masaaki Kanno, chief economist at Sony Financial Holdings in Tokyo and a former BoJ official, told Bloomberg TV.

However, the bank did lift its economic growth outlook to 1.8 percent for the current fiscal year from its previous estimate of 1.6 percent. It also hiked its fiscal 2018 outlook by 0.1 percentage point to 1.4 percent.

Tokyo's years-long effort to kickstart growth -- a blend of massive monetary easing, government spending and red-tape slashing -- stoked a stock market rally, weakened the yen and fattened corporate profits. But growth in the wider economy remains fragile.

While Japan's job market is tight, individual spending -- which accounts for more than a half of the country's gross domestic product -- has remained in the deep freeze.

Bank governor Haruhiko Kuroda called the further delay in hitting the target "unfortunate" at a news conference after the meeting, saying other central banks have also missed their intended marks.

The bank will continue to do what is necessary but sees no need at present to add more stimulus, he said, stressing: "The momentum toward achieving the two-percent goal remains intact."

- Yen weakens -

But analysts expressed scepticism.

"Even after today?s downward adjustments, the bank?s inflation forecasts for the current fiscal year remain too high and there is little chance of hitting the two percent target next year either," Marcel Thieliant, economist at Capital Economics, said in a commentary.

"The upshot is that we expect the bank to leave policy settings unchanged for the foreseeable future."

 
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The dollar was up at 112.38 yen in the afternoon from lows of around 111.80 yen touched earlier in the morning, but the Nikkei 225 ended up 0.62 percent.

"Yen-selling accelerated following the announcement as the delay in (achieving) the inflation target generally means the BoJ would have to continue its easing in sharp contrast to other major central banks moving to tightening," Tomohiro Nishida, a dealer at Sumitomo Mitsui Trust Bank, told AFP.

Expectations the BoJ will stick to its loose policy path for some time has dragged the yen down against other major currencies, with the euro up more than 10 percent this year and the pound around seven percent higher.

Government and central bank officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for failure to achieve the target.

Falling prices can discourage spending by consumers, who might postpone purchases until prices drop more or they might save money instead.

That puts pressure on businesses, creating a cycle in which firms then cut back on expanding production, hiring new workers or boosting wages.

The BoJ had hoped consumers would spend more if prices were rising, persuading firms to expand operations and getting the economy humming. But wage growth has fallen below expectations and workers have less money to spend.

Earlier in the day the government released data showing Japan had recorded a trade surplus of nearly $4 billion in June, rebounding from a deficit the previous month.

source: AFP