BoJ sees possible zero inflation in setback to Abenomics

Tokyo: The Bank of Japan on Tuesday said tumbling energy prices could push inflation to zero, marking another setback for Tokyo's attempt to stimulate the economy by conquering years of falling or stagnant prices.

While the central bank repeated its view that inflation expectations were "rising on the whole" and it held off launching fresh stimulus, its commentary strikes another blow to efforts to reach sustained 2 percent inflation by next year.

"The year-on-year rate of increase in the CPI (consumer price index) is likely to be about 0 percent for the time being, due to the effects of the decline in energy prices," the BoJ said in a statement after wrapping up a two-day policy meeting.