Tokyo: The Bank of Japan is preparing a long-term strategy to achieve its inflation target, according to a report released on Friday.
During its monetary policy meeting held on September 20 and 21, some of its members had expressed doubts about the possibility of achieving the inflation target set by BOJ in the near future, according to preliminary meeting minutes.
"Amid considerable downside risks to prices, it is imperative to ensure the sustainability of monetary easing and thereby prevent Japan`s economy from returning to deflation," said the report.
BOJ "should adopt a new policy framework and implement necessary measures as appropriate", adds the report.
During the meeting, the BOJ also decided to continue investing in its asset purchase programme, launched in 2013, to achieve its 2 percent inflation goal, a target which was initially set for 2015.
The bank said in the report the asset purchase programme aimed at doubling the monetary base, has improved economic activity and price dynamics and lifted Japan from an almost two-decade long deflationary cycle.
The current assessment differs from recent Consumer Price Index data published on Friday and corresponds to that of August, showing a drop of 0.5 per cent year-on-year, the sixth consecutive drop mainly due to lower crude oil prices and weak domestic consumption.
BOJ argued that oil prices, lower demand after 2014 VAT increase, slowdown of emerging markets and market volatility have weakened the stimulus that its program had given to the prices.
From October onwards the bank decided to set its focus of monetary policy on controlling and promoting an upward yield curve through a new purchase system that will expand the range with respect to the denomination of debt instruments to be acquired.