The central bank, which has its key interest rate already at a low 0.5 per cent, is expected to cut its growth outlook and raise its inflation forecast in a half-yearly economic report due out today. Japanese industrial output fell 3.1 per cent in March – the biggest monthly fall for at least five years and far below a market median forecast of a 0.8 per cent drop.
”This could raise concerns that the Japanese economy is slowing down sharply in the January-March quarter,” said Yasuhide Takahashi, economist at Nomura Securities. ”Output is also not expected to recover much in coming months after a sharp drop in March. We think the economy will remain sluggish until the third quarter of this year.”