BOJ to revise FY 2008 growth projection downward to less than 1.0%

TOKYO, Oct. 1 Kyodo - The Bank of Japan is expected to revise its fiscal 2008 real Japanese economic
growth projection downward from 1.2 percent given in July to less than 1.0
percent at the end of this month, informed sources said Wednesday.

The expectation emerged as the central bank's September Tankan business
sentiment survey Wednesday showed a key business confidence indicator for large
manufacturers dropped to a five-year low.
The BOJ is also expected to revise its real economic growth forecast downward
from July's 1.5 percent for fiscal 2009 that starts next April, the sources
said.
The bank may specify the revisions in its biannual Outlook for Economic
Activity and Prices that it will finalize at a monetary policy meeting on Oct.
31. In July, the BOJ made an interim revision to the April outlook.
For fiscal 2010, the central bank is expected to project a higher growth rate
than for fiscal 2008 or 2009 in the outlook, the sources said.
They also said the coming outlook is expected to reiterate July's prediction
that price hikes in Japan may slow down in fiscal 2009. In July, the bank
forecast that Japan's core consumer price index would rise 1.1 percent in
fiscal 2009 after increasing 1.8 percent in fiscal 2008.
For July and August, the core CPI scored a 2.4 percent year-on-year jump,
exceeding the bank's price stability guideline of 0-2 percent growth.
While some financial market players expect to see an interest rate cut amid the
current economic slowdown, the sources said the central bank has little room to
lower its interest rate, which is already as low as 0.5 percent.
Without a surprising deterioration of the economy, the BOJ may keep the
interest rate unchanged, they said.