THE Bank of Japan kept interest rates unchanged on Friday and issued fresh estimates projecting inflation to stay near its 2 per cent target in the next three years, signalling its readiness to hike borrowing costs later this year.

As widely expected, the BOJ maintained its short-term interest rate target at a range of 0-0.1 per cent in a unanimous vote.

In fresh quarterly forecasts, the board projected inflation, as measured by an index stripping away the effect of fresh food and fuel costs, to hit 1.9 per cent in the current fiscal year that began in April, followed by 1.9 per cent in fiscal 2025 and 2.1 per cent in 2026.

In the previous forecast, the BOJ had projected inflation to hit 1.9 per cent in both fiscal 2024 and 2025.

The central bank ended eight years of negative rates and other remnants of its unorthodox policy last month, making a historic shift away from decades of massive monetary stimulus that was aimed at quashing deflation and revitalising growth. REUTERS