Japan in recession, says BOJ; keeps credit policy unchanged

The Bank of Japan kept monetary policy unchanged on Thursday even as it lowered growth forecasts and estimated the economy tipped into recession early this year, disappointing economists who felt the grim readings after last month’s earthquake called for more policy easing.

The Bank of Japan kept monetary policy unchanged on Thursday even as it lowered growth forecasts and estimated the economy tipped into recession early this year, disappointing economists who felt the grim readings after last month’s earthquake called for more policy easing.

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Japan’s recovery from the quake would accelerate from October, the BOJ said in its twice-yearly outlook on the economy. At the same time, it revised up economic forecasts for the year ending in March 2013 and raised its estimate for inflation in the current fiscal year. “As supply constraints caused by the damage ease after early autumn onwards, potential demand and reconstruction demand will emerge.”

Speaking after the policy meeting, BOJ Governor Masaaki Shirakawa said he was well aware of the uncertainty in the economic outlook. The central bank earlier said it would take steps in the future as needed.