Heading into the Bank of Japan's (BOJ) policy meeting next week, the government cut its economic growth forecast for this year and raised inflation expectations above the central bank's target.
Prime Minister Fumio Kishida said that Japan's economy had recovered modestly on the back of steady wage increases and strong increases in corporate spending.
In its projections, the government sees an expansion of 1.3% in the economy in the current fiscal year ending March 2024, which is down from a forecast made in January of 1.5%.
While overall consumer inflation is expected to reach 2.6% pa this fiscal year, higher than the 1.7% projected in January and surpassing the central bank's target of 2%.
The expectation comes ahead of the BOJ's policy meeting next Friday, where it will also release its new quarterly projections.
With inflation expected to exceed the central bank's 2% target, will it push the BOJ to stop its ultra-loose policy practices?
The yen traded steady against the greenback at around 139.53 in the European session, failing to react to the latest report.
