TOKYO – The Bank of Japan raised its inflation forecast on Thursday, but maintained ultra-low interest rates and warned of risks to the economic outlook in a sign it will remain an outlier among a global wave of central banks tightening monetary policy.
“For the time being, while closely monitoring the impact of COVID-19, the bank will support financing … and will not hesitate to take additional easing measures if necessary,” the BOJ said in a statement announcing the decision.
As widely expected, the BOJ kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield by a 8-1 vote.
In fresh quarterly projections, the BOJ raised its core consumer inflation forecast for the current fiscal year ending in March 2023 to 2.3% from 1.9% projected in April.
It expects core consumer inflation to hit 1.4% in fiscal 2023, compared with 1.1% in April.
The board cut its economic growth forecast for the current fiscal year to 2.4% from a 2.9% rise seen three months ago.
(Reporting by Leika Kihara, Tetsushi Kajimoto, Daniel Leussink and Kantaro Komiya; Editing by Chang-Ran Kim)
