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Bank of Japan on Tuesday revised down the nation’s economic growth outlook for the current financial year after a tax increase in April.
The central bank expected the world’s third-largest economy to grow 1.0 per cent for the year through March 2015, downgraded from the 1.1 per cent growth predicted in April.
The Government raised the country’s sales tax in April to 8 per cent from 5 per cent — the first hike in 17 years.
The bank said it expected the economy to expand 1.5 per cent in the next financial year through March 2016, unchanged from April forecast.
The bank said on Tuesday it would maintain its aggressive monetary easing measures to combat deflation and prop up the economy.
“Japan’s economy has continued to recover moderately as a trend although the subsequent decline in demand following the front-loaded increase to the consumption tax hike has been observed,” it said after a two-day policy meeting.
In April 2013, the bank had decided to introduce aggressive monetary easing in order to achieve two per cent inflation within about two years in a country which has been plagued by deflation more than a decade.
The bank said on Tuesday it also expected consumer prices to climb 1.3 per cent in the current financial year, unchanged from the previous forecast, and to 1.9 per cent in the year through March 2016.
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