By Megumi Fujikawa
TOKYO--The Bank of Japan lowered its economic growth forecast on Wednesday in a reflection of the coronavirus pandemic, and kept its monetary policy unchanged.
"Japan's economy has been in an extremely severe situation with the impact of Covid-19 remaining at home and abroad," the bank said in its quarterly economic outlook report.
The bank's policy board projects the Japanese economy will shrink between 4.5% and 5.7% in the fiscal year ending March 2021. In its previous report three months ago, it had projected a contraction of between 3% and 5%.
It predicts core inflation excluding fresh food at minus 0.5% and minus 0.7% in the current fiscal year. The latest projection shows the BOJ is unlikely to reach its 2% inflation target for at least another two years. The bank expects core inflation to rise 0.7% in the year ending March 2023.
The BOJ's policy board maintained its target for short-term interest rates at minus 0.1% and its target for the 10-year Japanese government-bond yield around zero.
The board kept its annual target for purchases of stock exchange-traded funds at 12 trillion yen ($111.91 billion) and held the limit for commercial paper and corporate bond purchases at Y20 trillion.
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