The Bank of Japan lowered inflation forecasts on Wednesday and warned about growing risks for the economy due to sluggish global demand, leaving unchanged super-soft monetary policy.

The Japanese Central Bank also reiterated that it is waiting for the continued growth of the country's economy at a moderate pace. Many analysts are worried about the prospects for the third largest economy in the world against the background of growing pressure on global growth due to the trade war between the United States and China, Japan’s largest trading partners.

“The Japanese economy is likely to continue to expand until the end of fiscal year 2020,” the Bank of Japan reported in its quarterly report.

“Foreign economies in general are expected to continue to grow steadily, but recent events such as the US-China trade standoff deserve attention.”

Among the risks to the Japanese economy, the regulator singled out protectionism, the exit of the UK from the EU and the US economic policy.

“Such downward risks related to foreign economies are likely to increase, and it is also important to closely monitor the impact they have on companies and households in Japan,” the central bank said.

Following the meeting, the Bank of Japan left the short-term interest rate at the level of minus 0.1 percent and repeated the promise to maintain the yield of ten-year government bonds close to zero percent.

The regulator lowered its forecast for core consumer inflation to 0.9 percent in the fiscal year, which starts in April, from 1.4 percent amid falling oil prices and the possible effects of a slowdown in the global economy. The forecast was worsened for the fourth time since April 2017.

Nevertheless, it still remains above the forecast of analysts who expect inflation at the level of 0.7 percent.

The Japanese Central Bank also lowered its forecast for core consumer inflation in fiscal year 2020 to 1.4 percent from 1.5 percent projected in October.

Meanwhile, China in 2019 will increase budget spending to support the economy, focusing on further tax cuts and fees levied on small firms, officials in the country's finance ministry said on Wednesday.

China’s GDP growth rate in 2018 dropped to a minimum in 28 years, despite the expansion of incentive measures and support for lending.

The government of China may announce new fiscal stimuli, including more substantial tax cuts and increased spending on infrastructure projects, during the session of the National People's Congress, the country's highest legislative body, in March, economists said.