TOKYO, May 1 (Reuters) - Japan's government bonds (JGBs)

rose, driving yields lower, after the nation's central bank said

it became more pessimistic about the economy.

The Bank of Japan kept interest rates steady and slashed its

growth forecasts on Thursday, as the hit to global demand from

higher U.S. tariffs cloud the outlook for the country's fragile

economic recovery.

As widely expected, the board decided to keep the BOJ's

short-term policy rate unchanged at 0.5% by a unanimous vote.

The 10-year JGB yield fell 3.5 basis points

to 1.275%, while benchmark 10-year JGB futures rose

0.45 yen to 141.1.

The two-year JGB yield fell 1 basis point to

0.66%.

(Reporting by Junko Fujita and Rocky Swift; Editing by Mrigank

Dhaniwala)