TOKYO: Japan's central bank hiked its economic growth forecasts on Tuesday, citing an improved global outlook and a weaker yen but the country's finance chief warned of "uncertainty" caused by the arrival of Donald Trump in the White House.
After its first meeting of the year the Bank of Japan also held off any fresh monetary-easing measures, though earlier spending data highlighted the challenge facing officials trying to refire the world's number-three economy.
The BoJ tipped expansion to hit 1.4 percent in the current fiscal year to March, compared with its previous one percent estimate, and 1.5 percent growth in the following 12 months, from its earlier 1.3 percent forecast.
In the year to March 2019 it saw 1.1 percent growth, up from an initially flagged 0.9 percent.
"The projected growth rates are somewhat higher, mainly reflecting improvement in overseas economies and the yen's depreciation," the bank said in its quarterly outlook.
The yen has lost about 10 percent of its value against the dollar since the bank's last forecast in November as traders bet Trump's planned infrastructure spending, tax-cutting measures will fire US inflation and force the Federal Reserve to ramp up interest rates.
A weaker yen is positive for Japanese exports as it makes them more competitive abroad.
However, Trump's arrival in the Oval Office has also fuelled confusion in world capitals, with fears he will also follow through on promises to tear up free-trade agreements, throw up tariffs and spark a global trade war.
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