TOKYO -- The yen's recent slide to a three-year low against the dollar has Japan worried that this could hurt business and consumer sentiment by making things more expensive amid skyrocketing commodity prices. But on Thursday, Bank of Japan Gov. Haruhiko Kuroda dismissed this, saying a weak yen does more good than harm.

Speaking after a two-day monetary policy meeting, he noted the positives of a weaker yen, which boosts the value of overseas corporate earnings when converted into the Japanese currency. "The positive impact substantially outweighs the negative," he said. "The current yen weakness is positive for the economy, without a doubt."

Kuroda, a former currency diplomat at the Ministry of Finance, described the current yen-dollar rate as undervalued, but only slightly.

Earlier this month, the yen fell to the 114 range against the dollar. Coming on the heels of a spike in the prices of crude oil, coal and other commodities, as well as high-tech components like semiconductors, the yen's slide sparked concern that it could dampen corporate and consumer sentiment. The issue also came up in a parliamentary debate.

Prime Minister Fumio Kishida said he would not comment on the exchange rate.

Earlier in the day, the Bank of Japan trimmed its growth forecast for the current fiscal year after COVID-19 disruptions forced automakers to slash production amid a shortage of microchips and other key parts.

Coronavirus outbreaks in Malaysia, Vietnam and other countries have overshadowed semiconductor supply chains, sparking 30-40% drops in output in Japan's key auto sector over the September-October period, although cuts are expected to ease from November.

In its quarterly outlook, the BOJ estimates economic growth at 3.4% for the fiscal year ending next March, compared with the 3.8% touted in July.

And, in a move that surprised some market players, it now projects consumer inflation at 0.0%, after a July forecast of 0.6%. That could stoke expectations the BOJ will maintain its monetary stimulus, unlike central banks such as the U.S. Federal Reserve and the European Central Bank.

The so-called dot plot indicated there was little disagreement among the BOJ's nine policy board members regarding consumer inflation forecasts for fiscal 2021. "It shows that the ... members think that the deflationary mindset is deeply entrenched in Japan," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

Kuroda echoed this view. In the news conference, he said Japanese corporations are absorbing increased materials costs by lowering profit margins instead of passing the burden on to consumers. "Businesses have been unable to break the habit they acquired during the deflationary period," he said.

The report comes as bright spots start to emerge in Japan's economy. Personal consumption is rebounding amid a sharp fall in the country's COVID cases since September that prompted the lifting of a national state of emergency on Oct. 1 for the first time in six months.

For the fiscal year starting next April, the BOJ expects growth of 2.9% versus a July forecast of 2.7%, and consumer inflation at 0.9% unchanged from its earlier estimate.

The BOJ decided to hold its monetary levers in place -- guiding short-term interest rates to minus 0.1% and long-term rates to around zero.

It is also keeping intact the COVID credit facility introduced in March 2000 to take steps such as buying corporate bonds and commercial paper as well as offering one-year interest-free loans to banks supporting coronavirus-hit businesses.

The decision comes as central banks around the world start tightening monetary policy in response to rising consumer inflation triggered by global supply shortages. South Korea's central bank has raised policy rates to 0.75% from 0.5%, while New Zealand's has lifted them to 0.5% from 0.25%.

The U.S. Fed is also expected to start hiking rates next year, earlier than the 2023 date forecast six months ago.

The diverging interest rate outlook between the U.S. and Japan has driven a sharp depreciation in the Japanese yen against the dollar, with the Japanese currency touching a three-year low of 114 yen earlier in October.

The weakening yen could raise prices for imported goods and drive up production costs, complicating the BOJ's efforts to support economic recovery with loose monetary policy.