The Bank of Japan cut its inflation forecasts on Wednesday but maintained its massive stimulus program, with Governor Haruhiko Kuroda warning of growing risks to the economy from trade protectionism and faltering global demand.
Rising pressure from the trade war between China and the United States — Japan’s biggest trading partners — is adding to strains on the world’s third-largest economy and undermining years of efforts by policymakers to foster durable growth.
Data earlier in the day showed Japan’s exports in December fell the most in two years.
“To be honest, if U.S.-China trade tensions are drawn out, there will be a serious risk to the global economy – first to the two countries’ own economies,” Kuroda told a news conference after the end of the two-day policy review.
“For now, that possibility is slim, and I hope they will resolve this soon.”
As expected, the BOJ trimmed its inflation forecasts, reinforcing views that it will have to stick with its unprecedented economic support for some time to come.