TOKYO: The Bank of Japan revised down its annual growth forecast on Thursday and maintained its ultra-loose monetary policy as the pandemic continues to weigh on the world's third-largest economy. In a quarterly report on prices and the economy, the central bank predicted growth of 3.4 percent for the year to March 2022, down from its previous forecast of 3.8 percent.

"Downward pressure stemming from Covid-19 is likely to remain on service consumption, and exports and production are expected to decelerate temporarily due to supply-side constraints," the report said. "Thereafter, however, with the impact of Covid-19 waning gradually, mainly due to widespread vaccination, the economy is likely to recover."

Reflecting this more positive longer-term outlook, the bank revised up its growth forecast for the fiscal year to March 2023 to 2.9 percent from the previous estimate of 2.7 percent.