BoJ rebels switch over to back extended easing Haruhiko Kuroda, Bank of Japan governor, has quashed a rebellion by board members opposed to last month's extension of the bank's easing programme, winning over three rebels for his plan to pump up the central bank's monetary base by Y80tn ($682bn) a year. Last month, Mr Kuroda stunned markets by announcing an extension of the BoJ's already aggressive monetary easing programme, lifting asset purchases from about Y60tn-Y70tn in a bid to push inflation closer to its 2 per cent target. That decision was backed by just five of the nine board members - a surprise departure from BoJ convention, which normally sees a delicate process of consensus-building in the days before a meeting. But on Wednesday the BoJ announced that its latest two-day policy meeting had ended with eight votes in favour of that extended programme, which includes net annual government bond purchases of Y80tn and Y3tn of stocks. The much bigger majority is a boost to Mr Kuroda, who has faced criticism that his stepped-up easing programme is taking Japan closer to de facto monetisation of the government's huge fiscal deficit, causing heightened volatility in the bond market while heaping downward pressure on the yen. The rebels" about-turn is unsurprising, said Yasunari Ueno, chief market economist at Mizuho Securities. Once the policy has been settled, they have decided not to cause additional disorder or turbulence in the market. The BoJ's assessment of the world's third largest economy was more downbeat than three weeks ago, when it judged that Japan would continue to grow "at a pace above its potential," which it reckons to be about 0.5 per cent a year. On Wednesday it made no reference to potential growth, but listed several weak features of the economy's "moderate recovery" - including patchy industrial production thanks to inventory adjustments, flat exports, and falling housing investment. Big cuts to companies" inventories were the main cause of Japan's slide into a technical recession between April and September, the government reported this week, as demand was hit by the 1 April rise in consumption tax, from 5 per cent to 8 per cent. On Tuesday evening, prime minister Shinzo Abe confirmed that he would push back a second scheduled rise in the tax to 10 per cent, due next October, if his party were to be re-elected in a snap election next month. The BoJ on Wednesday also appeared to soften its projection for price rises, saying that the year-on-year rate of increase in the consumer price index - which excludes tax and fresh food - is expected to remain at the current level of 1 per cent "for the time being." In the October 31 six-monthly outlook report on prices and the economy, the BoJ said that CPI would remain at its current level for the time being, but would "subsequently accelerate gradually" to reach the 2 per cent target in or around the 2015 fiscal year. In the bank's previous monthly policy statement on October 7, CPI had been expected to be "around 1.25 per cent for some time." The lone hold-out on Wednesday was Takahide Kiuchi, a former chief economist at Nomura Securities, who has consistently expressed doubts over the duration and the intensity of Mr Kuroda's easing programme. The composition of the BoJ's policy board is not due to change until March next year, when Ryuzo Miyao - among Mr Kuroda's allies last month - is due to stand down. The LDP will probably want to nominate a "very dovish guy" to replace him, said Kentaro Koyama, an economist at Deutsche Securities in Tokyo. Until then, he said, the Hallowe'en rebels are likely to "take a wait-and-see strategy. But if they recognise that hitting the 2 per cent inflation target is not achievable, they may take more aggressive action. The policy split last month was the first 5-4 vote in "peacetime," confirmed a BoJ insider, noting that there was another narrowly-approved decision in the depths of the Lehman crisis.