By Megumi Fujikawa
TOKYO--The Bank of Japan lowered its growth forecast, reflecting supply-chain constraints that have weighed on exports and production, and said it didn't see significant inflation coming.
In its quarterly outlook report released Thursday, the bank's policy board projected the Japanese economy would expand 3.4% in the current fiscal year ending March 2022, compared with its previous projection of 3.8% released in July. It said it expects 2.9% growth in the year ending March 2023, up from a previous projection of 2.7% growth.
Japan's major auto makers are cutting back on their production plans after increasing infections in Southeast Asia caused factory shutdowns. Earlier this month, Toyota Motor Corp. said it would cut its global production by 10% to 15%, or about 100,000 to 150,000 vehicles, in November compared with an earlier plan owing to chip shortages.
Supply-side constraints have raised concerns for inflation in the U.S. and Europe. Federal Reserve Chairman Jerome Powell said last week, "The risks are clearly now to longer and more-persistent bottlenecks, and thus to higher inflation."
The Bank of Japan, however, doesn't anticipate significant inflation in Japan.
The bank's policy board said it expects core consumer prices, a figure that excludes fresh food, to be flat in the year ending March 2022 and would rise 0.9% in the following year. That is below the bank's longstanding 2% inflation target. In its previous report, the bank expected core prices to rise 0.6% and 0.9% in those years, respectively.
Also on Thursday, the central bank maintained its target for short-term interest rates at minus 0.1% and its target for the 10-year Japanese government bond yield at around zero.
Write to Megumi Fujikawa at Megumi.Fujikawa@wsj.com
(END) Dow Jones Newswires
October 27, 2021 23:22 ET (03:22 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.