Forex News – Bank of Japan holds rates while cutting country’s growth forecasts

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The Bank of Japan announced its decision on Tuesday to keep its overnight call rate on hold while cutting Japan’s economic growth forecasts for 2012. The central bank’s Policy Board cited a strong yen as hampering recovery.

The interest rate was kept between 0 to 0.1% as the bank reiterated to maintain the virtually zero interest-rate policy “until it judges that price stability is in sight.”

Additionally, the BOJ cut back previous growth forecasts. The central bank said that “growth prospects will likely be lower for fiscal 2011, due to the revision of past GDP statistics in addition to the slowdown in overseas economies.”

Three months ago the central bank forecast that GDP would grow 0.2% to 0.4% in the current fiscal year ending in March. Today the central bank said that the period would instead show a contraction of between 0.3% and 0.4%.

Despite revising down growth this year,  it noted that the economy will gradually return to a moderate recovery and raised its expectations for 2013.

GDP is now forecast to grow 1.8%-2.1% in 2012, down from a previous 2.1%-2.4% prediction. For 2013, growth is seen at 1.4%-1.7%, up from 1.3%-1.6% previously.