Tokyo: Japan's central bank on Thursday decided to keep its policy rate unchanged, while it also downgraded its economic outlook for the country. At a two-day policy meeting, Bank of Japan's (BOJ) Governor Kazuo Ueda and his eight board colleagues agreed to maintain the benchmark short-term rate steady at around 0.5 percent, holding the policy the BOJ established in January, according to a statement released by the BOJ.
According to Kuwait News Agency, in its outlook report published after the meeting, the BOJ revised down its growth forecast for one of the world's largest economies. The economy is now expected to grow 0.5 percent in the fiscal year 2025, which began in April, compared with the 1.1 percent growth estimated in January. The central bank also downgraded the growth projection for the following year to 0.7 percent from the previous estimate of 1.0 percent.
The BOJ remarked, "Japan's economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors." However, they expect Japan's economic growth rate to pick up thereafter, with overseas economies returning to a moderate growth path.
In addition to these forecasts, the BOJ cut its outlook for core inflation, which excludes volatile fresh food prices, for fiscal 2025 to 2.2 percent, down from its previous forecast of a 2.4 percent increase. Inflation for fiscal 2026 is predicted to rise 1.7 percent, slower than the 2.0 percent estimate made in January, the bank added. The BOJ highlighted various risks to the outlook, noting, "In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them."