Bank of Japan cuts inflation forecast, warns of soft consumption as pandemic pain lingers

[TOKYO] The Bank of Japan on Tuesday cut this fiscal year's consumer inflation forecast and warned of lingering risks to the economic outlook as the Covid-19 pandemic continues to hurt consumption.

As widely expected, the BOJ maintained its short-term interest rate target at -0.1 per cent and that for 10-year government bond yields around 0 per cent.

"The pick-up in consumption is stalling as downward pressure on service spending, such as for dining and accommodation, is strengthening," the central bank said in a quarterly report on the economic and price outlook.

In its fresh quarterly projections, the BOJ said it expects core consumer inflation to hit 0.1 per cent in the current fiscal year that began in April. That was lower than 0.5 per cent projected in January.

The BOJ now expects core consumer inflation to hit 0.8 per cent the following year and 1.0 per cent in fiscal 2023.

REUTERS