The Bank of Japan (BoJ) released its interest rate decision on Thursday. The BoJ kept its monetary policy unchanged (interest rate: 0.00-0.10%, monetary base target: 275 trillion yen). The central bank will expand its monetary base at an annual pace of 80 trillion yen. This decision was expected by analysts.
The central bank voted 8-1 to keep its monetary policy unchanged. The BoJboard member, Takahide Kiuchi, said the central bank should cut its asset purchases to 45 trillion yen annually.
The BoJ lowered its forecast for core consumer price index (CPI) to 0.8% for fiscal year 2015, down from its previous estimate of a 1.0 gain in January. The central bank also downgraded its forecast for this fiscal year's gross domestic product (GDP) to 2.0%, down from its previous estimate of a 2.1 rise in January.
Core CPI forecast was downgraded to 2.0% fiscal year 2016, down from the previous estimate of a 2.2% increase in January. The GDP growth forecast was cut to 1.5% for fiscal year 2016, down January's estimate of a 1.6% rise.
The BoJ pointed out that the second sales tax hike slated for 2017 is a potential risk to Japan's economy.
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