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Japan's central bank cuts growth, inflation forecasts, maintains monetary policy

Xinhua, July 15, 2015 Adjust font size:

The Bank of Japan (BOJ) on Wednesday cut its economic growth and inflation forecasts owing to sluggish trade brought on by slowing overseas economies, but maintained its highly accommodative monetary easing policy.

Following a two-day policy meeting, the central bank announced that it now expects the nation's economy to expand by 1.7 percent this fiscal year, down from its previous forecast of 2 percent made in April.

The policy board meeting also concluded with an inflation downgrade for the fiscal year to March 2016, to 0.7 percent, and 1. 9 percent in the year thereafter.

The latest downgrade follows the bank's initial lofty inflation target of 2.0 percent reconfirmed earlier this year, for the first half of FY 2016.

While maintaining its asset purchasing program at an annual rate of 80 trillion yen (about 648 billion U.S. dollars) to stimulate prices and growth, the BOJ maintained its view that the world's third largest economy "has continued to recover moderately. "

Following eased concerns over economic woes in the single- currency eurozone, as fresh talks on a bailout for debt-plagued Greece proceed, BOJ Governor Haruhiko Kuroda reiterated his optimism Wednesday about the prospects for the global economy, highlighting strong economic growth data from China in the Q2 and Japan's own trade situation likely to improve in the near future.

"Export and output growth have moderated somewhat, but we expect this to be temporary," the BOJ chief told a news conference after the policy board meeting concluded Wednesday.

Kuroda added that the likelihood was that exports here would increase steadily looking ahead, commensurate with overseas economic growth and a weak yen, which boosts the value and competitiveness of exporters' goods overseas when profits are repatriated.

"As for the outlook, exports are expected to increase moderately, albeit with some fluctuations, due to improvements in overseas economies and the boost from a weak yen," Kuroda said, reiterating his board's view that the central bank will hit its price targets in the first half of FY 2016. Endi