Ending its first policy meeting in the new year, the Bank of Japan said Tuesday it expected the national economy to expand by 1.4 percent in the year through March, revised up from October estimates of just 1.0-percent growth in the current fiscal year.

The central bank also predicted GDP to expand by 1.5 percent in the next year through March 2018, up from the 1.3 percent pickup estimated three months ago.

Despite the more optimistic outlook, the most recent estimates are still far below the 2.0-percent target set by the lender in April 2013 when it started an aggressive monetary easing campaign to overcome deflation and stimulate the economy.

Yen in focus

That policy has been supported by Prime Minister Shinzo Abe's government. Abe had vowed to pull the world's third-largest economy out of a deflationary spiral when he took office in December 2012.

"The projected growth rates are higher, mainly reflecting improvement in overseas economies and the depreciation of the yen," the Bank of Japan said in its outlook.

The yen has lost about 10 percent of its value against the greenback since the bank's last forecast in November as traders reckoned Donald Trump's planned infrastructure spending and tax-cutting measures would 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.

As expected, the central bank kept its monetary policy unchanged as it struggled to bring an end to almost two decades of on-off deflation.

hg/jd (dpa, AFP)