The Bank of Japan revised up its inflation forecasts on Thursday and offered a less gloomy outlook on the economy than three months ago, keeping alive the possibility of a resumption in interest rate hikes this year.

The Bank of Japan laid the groundwork this week for resuming interest rate hikes by spelling out explicitly for the first time the risks that persistent food price rises fan broad-based inflation. While markets took a dovish reading of BOJ Governor Kazuo Ueda's commentary after Thursday's policy meeting,

Bank of Japan watchers brought forward their forecast for when they expect the next interest rate hike, after clarity over trade increased with US President Donald Trump announcing deals including one with Japan.