The Bank of Japan is considering slashing the nation's economic growth forecast for the fiscal year to March to as low as 1.3 percent from its current 1.8 percent, the Mainichi Shimbun reported yesterday.
The expected downward revision is mainly due to an overall slowdown in the economy led by a slump in the nation's housing sector, the newspaper added.
It said the central bank, which is responsible for interest rate decisions, would announce the downgrade during its monetary policy meeting on January 21 and 22, revising an interim economic report from October.
Housing construction has fallen sharply after the introduction of stricter earthquake resistance standards earlier this year.
Housing starts dropped 27 percent to 84,252 units in November from a year earlier for a fifth straight month, the government said Thursday.
High oil prices are among the other negative factors likely to dissuade the Bank of Japan from ending its super-low interest rates for now, the Mainichi Shimbun reported.
In mid-December, the central bank held rates steady at 0.5 percent, where they have been since last February.
The government has already slashed its own economic growth forecast to 1.3 percent for the fiscal year from its earlier projection of 2.1 percent.