TOKYO (APP) – The Bank of Japan on Thursday cut its annual growth and inflation forecasts, as a slate of tepid data highlight weakness in the world’s number three economy, while analysts expect further monetary easing later in the year.
Gross domestic product will expand 2.0 percent in the year to March 2016, while the inflation rate is seen at 0.8 percent, the BoJ said in a semi-annual report. That compares with a previous estimate of 2.1 percent and 1.0 percent respectively.
The revision to the fiscal year forecast came after the central bank wrapped up a policy meeting Thursday where it held off fresh easing measures, despite flatlining inflation that is defying a two-year-old stimulus programme. In a widely expected decision, the BoJ stood pat on its record asset-purchase programme, which is adding about 80 trillion yen ($672 billion) to the money supply every year in a bid to jack up prices and kick start growth.
One BoJ board member lost his call to shrink the stimulus programme by nearly half, with his eight colleagues voting to stay the course.
The yen got a boost, with the dollar slipping to 118.73 yen from 118.85 yen before decision, The pickup in the yen, bad news for Japanese exporters, helped send Tokyo’s benchmark Nikkei stock index tumbling 2.69 percent Thursday.
Earlier in the morning official figures showed factory output fell by a less-than-expected 0.3 percent in March — tepid figures that highlight recovery.
BoJ Governor Haruhiko Kuroda, who holds a press briefing Thursday afternoon, has previously acknowledged that dragging Japan out of years of deflation was proving to be “very challenging”, and he warned that inflation may temporarily fall to zero
