Bank of Japan cuts growth forecast

Japan's central bank Wednesday cut its economic growth forecast to 1.5 percent for this fiscal year and softened its previous monetary policy stance of raising interest rates gradually.
"Japan's economic growth is slowing, mainly due to the effects of high energy and materials prices," the Bank of Japan said in a twice-yearly health check of the world's second largest economy.
In October it had forecast economic growth of 2.1 percent for this fiscal year. Growth is now expected to pick up to about 1.7 percent in the next fiscal year to March 2010, the BoJ said.
"The pace of economic growth has decelerated mainly due to the drop in housing investment and the effects of high energy and materials prices," it said.
"There have been increased downside risks to the economy stemming from uncertainties regarding future developments in overseas economies and global financial markets as well as the effects of high energy and materials prices."
Consumer prices, excluding fresh food, are expected to rise by 1.1 percent this fiscal year and by 1.0 percent next year as soaring energy costs lift Asia's largest economy out of its long period of deflation.