By Kaori Kaneko
TOKYO (Reuters) - Japan's economic recovery appears more fragile after a recent tax increase but the central bank looks less likely to ease policy, a Reuters poll showed, underscoring the uncertainty surrounding the world's third-biggest economy.
Economists responding to a monthly Reuters survey trimmed their growth forecasts, remaining notably less bullish than the government and the Bank of Japan, which have also cut their forecasts this month.
All the economists forecast the BOJ would miss its 2 percent inflation target, but expectations that the central bank would ease policy further this year are receding because it remains confident Japan is escaping from nearly two decades of deflation.
Economists are less sure but do not see inflation slowing abruptly.
Japan's economy will grow 0.7 percent in the fiscal year through March, according to the median of the 24 economists surveyed, down from 0.9 percent in last month's Reuters poll.
That is more bearish than the BOJ, which cut its forecast last week to 1.0 percent from 1.1 percent, and the government, which trimmed its forecast this week to 1.2 percent from 1.4 percent.
Still, a consistently upbeat message on prices from BOJ Governor Haruhiko Kuroda and confidence that Japan is not slipping back into deflation have pushed back expectations that the central bank will increase its massive asset-buying programme this year to spur growth and inflation.
Fewer than half - nine out of 21 - of the economists forecast an easing this year, down from more than two-thirds - 20 of 29 - last month.
"It's hard to imagine that price inflation will fall significantly below 1 percent, given recent (rises in domestic) gasoline prices," said Takeshi Minami, chief economist at Norinchukin Research Institute. "But, at the same time, we can't forecast prices will rise further."
For the short term, analysts in the poll forecast the economy contracted 1.4 percent in the April-June quarter from the previous three months, worse than the 1.2 percent they estimated last month, as the impact of the April 1 rise in the sales tax was greater than initially expected.
Despite cutting their GDP forecasts, the economists stuck to their inflation forecasts of 1.1 percent for this fiscal year and next.
Kuroda argues that while inflation, which hit 1.4 percent in May, will slow in coming months, it will not fall below 1 percent and will regain momentum late this year to hit the BOJ's target of 2 percent around the fiscal year to March 2016.
BOJ Deputy Governor Hiroshi Nakaso said on Wednesday that the end of deflation was in sight as rising wages and inflation expectations allowed companies to increase prices.
One reason the economists are cutting their growth forecasts even though they see a more hawkish BOJ could be because they do not consider the numerical target itself to be vital.
"I think common ground for the final inflation level does not have to be a rigid 2 percent - as long as prices move in a stable way around the upper end of the 1 percent to the lower end of 2 percent," said Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute.
(Polling by Diptarka Roy; Editing by William Mallard and Alan Raybould)