BOJ lowers assessment of Japanese economy in monthly report

TOKYO, July 17 Kyodo - The Bank of Japan downgraded its assessment of the Japanese economy in its monthly report released Wednesday, expressing concern about higher energy and raw material costs.

The nation's economy is ''slowing further'' the central bank said, emphasizing
the slowdown, compared with its assessment in June when it said the economy was
''slowing.'' It was the first downgrading of the overall assessment in three months.

As prices for petroleum products and food are rising, individual consumption
has ''recently weakened its pace of growth,'' the BOJ said, also revising its
assessment lower. The bank had been stating that personal consumption was
''firm'' since February last year.

On exports, the BOJ said they are ''slowing but keep rising as a trend'' -- a
weaker expression than ''rising although the pace has slowed.''

On the prospects for the economy, the central bank said it will
move
''gradually back onto the path of moderate expansion,'' indicating that the
timing of an economic recovery could be delayed. The BOJ said in June that the
economy would ''tread the path of moderate expansion.''

The BOJ decided Tuesday to maintain its key interest rate at 0.5 percent for
the 17th consecutive month.
The central bank lowered its estimate for the country's real gross domestic
product growth for the current fiscal year to 1.2 percent from 1.5 percent
projected in April.
It revised its inflation forecast higher, saying the core consumer price index,
excluding volatile fresh food prices, is expected to rise 1.8 percent in fiscal
2008, compared with the earlier projected increase of 1.1 percent.
After the rate decision Tuesday, BOJ Governor Masaaki Shirakawa said Japan's
economy is slowing because of a deterioration in the terms of trade.
==Kyodo