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Bank of Japan keeps policy steady, sounds more upbeat on economy

Bank of Japan keeps policy steady, sounds more upbeat on economy

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The Bank of Japan kept monetary policy unchanged on Thursday and offered a more upbeat view of the economy than last month, signalling its confidence that a pick-up in overseas demand will help sustain an export-driven recovery.

But the central bank slightly cut its inflation forecast for this fiscal year in a quarterly review of its projections, suggesting that it will maintain its massive monetary stimulus for the time being to achieve its ambitious 2 percent target.

At a post-meeting news conference due 0630 GMT, BOJ Governor Haruhiko Kuroda is likely to remind markets the Japanese central bank is nowhere near an exit from its massive stimulus, analysts say.

“Japan’s economy has been turning toward a moderate expansion,” the BOJ said a quarterly review of its long-term economic and price projections.

That was a more upbeat assessment than last month and in the previous quarterly report in January, which said the economy was “improving moderately as a trend.”

In a widely expected move, the BOJ maintained the 0.1 percent interest it charges on a portion of excess reserves that financial institutions park at the central bank.

At the two-day policy meeting that ended on Thursday, it also kept its yield target for 10-year Japanese government bonds around zero percent.

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