Posted on 12 Jul 2013
The Bank of Japan said an economic recovery was underway as it kept monetary policy steady, its most optimistic view in two and half years reflecting the positive impact of a weakening yen and its massive monetary stimulus on activity.
The central bank made no major changes to its forecast that consumer inflation will accelerate in the coming years to near 2% in the business year ending March 2016, a key target for Prime Minister Shinzo Abe’s drive to reflate the economy.
As widely expected, the BoJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen (US$600bil-US$700bil).
“Japan’s economy is starting to recover moderately,” the central bank said in a statement after its twoday meeting, revising up its assessment for the seventh straight month.
The last time the BoJ used the word “recover” to describe the economy was in January 2011, two months before the March 11 earthquake and tsunami that devastated the country.
Many central bank officials are encouraged by bright signs in the economy as the yen’s fall to multiyear lows supports exports and the feelgood mood generated by Abe’s reflationary strategy bolsters consumer spending and business confidence.
The BoJ said capital expenditure had stopped weakening and was showing some signs of picking up, and also upgraded its view on factory output to say it was “increasing moderately.”
