Tokyo - The Bank of Japan Wednesday cut its estimates for inflation to 1.0% for the next financial year, half its 2% target.
Three months ago, the bank had predicted inflation of 1.7% for the financial year through March 2016.
In April 2013, the central bank introduced an aggressive monetary easing policy under new governor Haruhiko Kuroda, in an attempt to overcome persistent deflation in Japan over the past two decades, and help stimulate the flagging economy.
The bank also revised downward its inflation outlook for the current financial year through March to 0.9% from 1.2% it had estimated in October.
The bank said on Wednesday it would pursue its monetary easing policy for the world's third-largest economy.