TOKYO (dpa-AFX) - The Bank of Japan maintained its interest rate but lifted its inflation outlook due to rising food prices, which had added expectations of an rate hike as soon as in October.
The policy board unanimously decided to hold the uncollateralized overnight call rate to remain at around 0.5 percent.
Previously, the bank had raised the benchmark rate to the current level from 0.25 percent in January.
In its quarterly Outlook for Economic Activity and Prices report, released Thursday, the bank raised its inflation outlook citing the rise in food prices. For the fiscal 2025, inflation forecast was lifted to 2.7 percent from 2.2 percent.
Inflation forecast for the fiscal 2026 was raised marginally to 1.8 percent from 1.7 percent and that for fiscal 2027 to 2.0 percent from 1.9 percent.
Economic growth projection for the fiscal 2025 was lifted to 0.6 percent from 0.5 percent, while the outlook for the fiscal 2026 and 2027 was retained at 0.7 percent and 1.0 percent, respectively.
Last week, Japan and the US reached a much awaited trade deal. The US administration agreed to reduce the tariffs on goods imported from Japan, to 15 percent from 25 percent. Tariffs on automobiles and car parts were also lowered to 15 percent.
In turn, the US will receive an investment worth $550 billion from Japan.
The BoJ board said there have been positive developments in trade and other policies, such as negotiations between Japan and the United States resulting in an agreement.
'That said, high uncertainties remain regarding negotiations between jurisdictions and the impact of trade and other policies on economic activity and prices at home and abroad,' the bank said.
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