The news is just in that the Bank of Japan (BOJ) has decided to keep its policy steady in an 8-1 vote Thursday, but it cut its forecasts for economic growth and inflation in its outlook statement.
The central bank lowered its forecast for core consumer price index (CPI) to 0.8 percent for fiscal year 2015 from its 1.0 percent projection in January. It also lowered its forecast for this fiscal year's gross domestic product (GDP) growth to 2.0 percent from the 2.1 percent it projected in January.
In January, it cut its GDP growth forecast to 1.5 percent from the 1.6 percent forecast for the 2016 fiscal year, while lowering its core CPI forecast for that year to 2.0 percent from January's 2.2 percent projection. But it cited considerable uncertainty on the price outlook, saying risks are skewed to the downside. The expected second sales tax hike slated for 2017 is also a potential risk to economic activity, it said.
Up until now, the BOJ has maintained its massive easing program of purchasing 80 trillion yen ($670 billion) worth of assets annually. But according to Marcel Thieliant, a Japan economist at Capital Economics, the BOJ is ignoring signs its efforts to boost inflation toward a 2 percent target are stalling. He had forecast the central bank would step up easing at this meeting.
Other analysts had broadly expected the BOJ would leave its easing program intact, while the Nikkei business daily had reported the central bank could lower its median inflation estimate for fiscal 2015.