ISTANBUL

The Bank of Japan kept its policy interest rate unchanged on Thursday at 0.5% in line with market expectations.

The bank's Economic Activity and Price Outlook report said Japan is expected to record moderate economic growth.

It stressed that core inflation will lose momentum mainly due to the slowdown in the economy, and that with the increase in economic growth, medium- and long-term inflation expectations will rise.

The increase in the core inflation is expected to accelerate gradually.

The report said exports and production remained almost stable as a trend despite some front-loading due to the increase in US tariffs.