BOJ Cuts Economic Assessment, Says Growth Is Slowing `Further
The Bank of Japan cut its assessment of the economy for the first time since April, saying growth is slowing “further'' as rising energy and commodities crimp spending by companies and households.
“Economic growth is slowing further, reflecting weaker growth in business fixed investment and private consumption against the backdrop of high energy and materials prices,'' the bank said in a monthly economic report in Tokyo today.
Central bank policy makers yesterday cut their forecast for this fiscal year's growth while raising their inflation outlook and holding the key interest rate at 0.5 percent. The probability of the recovery is “relatively'' high, they said, becoming less confident about the prospects of a rebound.
“The Japanese economy is clearly slowing sharply,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. “Few would criticize the Bank of Japan for leaving interest rates on hold until well into 2009.''
The central bank lowered its evaluation of consumer spending, saying it is “stagnating somewhat,'' after describing it as “firm'' in the previous month quick payday loan. It also cut its assessment of industrial output, calling it “somewhat weak,'' from “flat.''
The world's second-largest economy will grow 1.2 percent in the year ending March 31, slower than the 1.5 percent forecast on April 30, the central bank said yesterday. Consumer prices excluding fresh food will climb 1.8 percent, more than the 1.1 percent projected three months ago, it said.
Producer Prices
Producer prices, the costs companies pay for energy and raw materials, will probably increase 4.8 percent in the current fiscal year, almost double the April forecast of 2.5 percent, the central bank said.
The Bank of Japan released its projections for growth and inflation at the same time it announced the decision to keep interest rates unchanged. Starting this month, the bank will publish the monthly economic assessment on the business day after the rate decision.
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