(Reuters) -The Bank of Japan kept interest rates steady on Thursday and raised its inflation forecast for the current fiscal year, signalling cautious optimism that Japan's trade deal with the U.S. would help the economy avert a steep downturn.
As widely expected, the central bank maintained short-term interest rates at 0.5% by a unanimous vote at the two-day policy meeting that ended on Thursday.
Following are excerpts from BOJ Governor Kazuo Ueda's comments at his post-meeting news conference, which
was conducted in Japanese, as translated by Reuters:
INTEREST RATE TRAJECTORY
"If the economy and prices move in line with our forecast, we expect to continue raising interest rates and adjust the degree of monetary support in accordance to improvements in economic and price developments."
INFLATION OUTLOOK
"Uncertainty surrounding Japan's economy has receded due to Japan's trade agreement with the U.S. But there's no change to our baseline projection that underlying inflation will stagnate for some time due to slowdown in growth. Uncertainty surrounding each country's trade policy remains high."
"As for underlying inflation, we will look at various data including people's perception on prices, long-term inflation expectations ... and take a comprehensive assessment on the economy and prices."
"Underlying inflation still remains short of our 2% target, but expected to rise moderately ... The cycle of rising wages and inflation is still maintained."
"It's not as if we will wait until underlying inflation is firmly at 2%. Our decision (on whether to raise rates) is dependent on how likely underlying inflation will reach that level."
IMPACT OF FOOD INFLATION ON BROADER PRICE MOVES
"Rising food prices could hurt consumer sentiment and worsen household spending, or could prolong inflation. I'd like to always keep a close eye out on whether rising food costs could affect inflation expectations and underlying inflation."
(Reporting by Leika Kihara; Editing by Janane Venkatraman)
