Bank of Japan cuts growth forecast, holds key rate
Tuesday, July 12, 2011
TOKYO (AP) — Japan’s central bank on Tuesday cut its annual economic growth forecast due to the March 11 earthquake and tsunami, but said the economy is beginning to recover.
The Bank of Japan said after a one-day meeting that its policy board lowered expectations for economic growth to 0.4 percent from 0.6 percent for the current fiscal year ending March 2012.
The central bank said the nation’s factories were recovering, as well as demand from households and businesses. It said the country is on track to rebound over the second half of the fiscal year.
“Japan’s economic activity is picking up with an easing of the supply-side constraints caused by the earthquake disaster,” the bank said in a statement.
The country’s infrastructure was heavily damaged by the March disasters, which destroyed factories, ravaged large swathes of the northeast coast and caused a major nuclear power accident. Manufacturers struggled with parts shortages, and consumer spending tumbled.
The outlook released Tuesday was more upbeat than a month earlier, when the central bank said Japan’s economy was still under downward pressure.
The Bank of Japan also said all nine members of its policy board voted to maintain the overnight call rate target at zero to 0.1 percent. That decision was widely expected.
For the fiscal year starting in April of next year, the bank maintained its forecast for 2.9 percent growth in real gross domestic product. The growth forecasts are based on a survey of the board members’ individual outlooks.