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Bank Of Japan Leaves Policy Unchanged; Lifts Growth Outlook

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The Bank of Japan left its monetary policy stimulus unchanged but upgraded its growth outlook citing government's economic measures.

The Policy Board of the BoJ, on Tuesday, voted 7-2 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The board maintained it yield target for 10-year Japanese government bonds at around zero percent.

Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion.

The BoJ raised its growth forecast for the fiscal 2020 citing the effects of the fiscal stimulus.

The economy is expected to grow 0.9 percent in the fiscal 2020, up from the prior estimate of 0.7 percent. Likewise, the projection for fiscal 2021 was lifted to 1.1 percent from 1 percent.

The BoJ estimated the fiscal 2019 growth at 0.8 percent compared to the previous forecast of 0.6 percent.

The International Monetary Fund on Monday downgraded its global growth projections mainly due to the weaker-than-expected expansion in India.

According to IMF, Japan's growth will ease to 0.7 percent in 2020 from 1 percent in 2019. However, the forecasts were upwardly revised from those in October, mainly due to healthy private consumption.

The BoJ said inflation projections are more or less unchanged. The bank repeated that the annual inflation is likely to rise gradually toward 2 percent.

Inflation is forecast to rise to 1 percent in fiscal 2020 from 0.6 percent in the fiscal 2019. The projection for fiscal 2019 was lowered from 0.7 percent and that for 2020 from 1.1 percent.

For fiscal 2021, inflation is seen at 1.4 percent versus previous estimate of 1.5 percent.

The bank observed that risks to economic activity as well as prices are skewed to the downside.

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