Bank of Japan kept its monetary policy unchanged on Thursday and upgraded its economic forecast for the next fiscal year but warned of mounting risks to expectations as new Coronavirus emergency measures threaten to derail a fragile recovery.
Bank of Japan's Governor Haruhiko Kuroda said the board also discussed the bank's review of its policy instruments due in March, although no hints were cast on the likely outcome.
As it was widely expected, the Bank of Japan maintained its targets under the Yield Curve Control at -0.1% for short-term interest rates and around 0% for 10-year bond yields.
In the new quarterly forecast, the Bank of Japan raised its growth forecast for the next fiscal year to 3.9% from 3.6% seen three months ago, based on hopes that a massive government spending package will cushion the impact of the epidemic.
“I don't think the risk of Japan sliding back into deflation is high,” Mr Kuroda said, noting that the Bank of Japan had provided enough stimulus at the moment to cushion the coronavirus impact.