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Bank of Japan trims growth forecast on tech production cuts

The Bank of Japan said that growth in the world's second-largest economy will be slower than the bank predicted last October after technology companies cut production to reduce stockpiles.

"Japan's economy has deviated slightly below the outlook," the bank said in a statement yesterday in Tokyo, "partly due to larger-than-anticipated adjustments in production and inventories of IT-related goods."

Governor Toshihiko Fukui and the bank's eight other policy makers voted unanimously earlier yesterday to keep interest rates almost at zero and maintained the level of cash the bank pumps into the economy to end a six-year bout of deflation and stem the yen's gains.

Industrial production declined for two of three months through November as makers of electronics parts and devices cut back stockpiles. Manufacturers have curbed spending, hurting sales at machinery makers including Tokyo Electron Ltd.

The yen at close to a five-year high against the dollar threatens to cut profits of exporters including Sharp Corp and Sanyo Electric Co, slowing growth. The currency's 5.9 percent advance in the past three months also may deepen deflation by making imported goods cheaper.

The government, meanwhile, left unchanged its view that the domestic economy is recovering.
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