TOKYO, July 31 (Reuters) - The Bank of Japan kept interest rates steady on Thursday and raised its inflation forecast for the current fiscal year, signalling cautious optimism that Japan's trade deal with the U.S. would help the economy avert a steep downturn.
As widely expected, the central bank maintained short-term interest rates at 0.5% by a unanimous vote at the two-day policy meeting that ended on Thursday.
In a quarterly outlook report, the board revised up its core consumer inflation forecast for the current fiscal year to 2.7% from 2.2% projected three months ago.
BOJ Governor Kazuo Ueda will hold a news conference to explain the decision at 3:30 p.m. (0630 GMT).
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