FXStreet (Mumbai) - The Bank of Japan mentioned in its today’s statement that it expects the economy to continue its moderate recovery despite exports and production being hit by the slowdown in emerging economies. The BOJ believes economic recovery is possible despite low domestic capital expenditure and challenging global business conditions. The BOJ kept its economic assessment unchanged. As was widely expected, the central bank kept monetary policy stance steady while informing about its decision to increase the country's monetary base by about 80 trillion yen on an annual basis. The central bank decided to continue with QQE to achieve the price stability target of 2 per cent. It will also examine both upside and downside risks to economic activity and prices, and make necessary adjustments. Year-on-year rate of change in CPI likely to be about 0 per cent The central bank had initiated the Quantitative and Qualitative Easing (QQE) in April 2013 and had in October 2014 expanded the target by 10-20 trillion yen. It has time and again repeated that it will continue with QQE with to stimulate demand and steer the economy towards achieving 2 per cent inflation target. The aggressive easing championed by Abenomics however could not produce the desired results forcing the BOJ to push back the time by which it expected to achieve its inflation target. In its October meeting the BOJ had pushed its expectation for when inflation will reach its target to the second half of fiscal 2016. Fall in oil prices and the slowdown in China rendered a blow to the government’s and BOJ’s efforts to wade off low inflation and boost growth. As of now the year-on-year rate of change in the CPI is expected to be about 0 per cent on decline of energy price. The forecast for inflation in the current fiscal year has been slashed to 0.1 per cent and to 1.4 per cent for fiscal 2016. Economic growth to suffer in 2017 post sale tax increase The Q3 GDP data showed Japan has slipped into its fourth recession in five years. In the third quarter Japan's Gross Domestic Product contracted by 0.2 per cent from the second quarter. The forecast for economic growth in the current 2015 fiscal year has been slashed to an average of 1.2 per cent and to 1.4 per cent for fiscal 2016. In 2017 economic growth will further take a beating from a planned increase in sales tax on April 1, 2017. Official data released today showed a 2.1 per cent dip in Japanese exports. Exports and industrial production have posted disappointing figures mainly on the grounds of a slowdown in emerging economies. On the domestic demand side however business fixed investment has shown rising trend as corporate profits have continued to improve. Also, private consumption has been resilient and housing investment has been picking up. Financial conditions are accommodative. Factors such as developments in the emerging and commodity-exporting economies, the momentum of economic activity and prices in Europe, and the pace of recovery in the U.S. economy will determine the magnitude of risk that the economy might face in the coming quarters. Kuroda said there is no problem with continuation of QQE The Bank of Japan governor Haruhiko Kuroda at his post-meeting news conference today was optimistic of an economic recovery. He believes the emerging markets will likely move out of the slowing phase supported by growth in advanced economies. This in turn will assist Japan attain moderate increase in its trade volumes. Rises in exports and progress in inventory adjustment in some sectors will likely help factory output recover gradually. He also sees certain possibilities of an increase in capital investment “given companies' strong spending plans." He said he did not feel there was any need to announce a delay in “timing for achieving our price target” because of the fluctuation in oil moves. He does not see in problem in continuing with the QQE programme. He reiterated the decision to continue the programme till inflation target was achieved. The emphasis was on achieving the target at the earliest. However, he mentioned that he had never said “we will only maintain this programme for two years”. For more information, read our latest forex news.