Japan's central bank upgraded its assessment of the nation's economy for the seventh consecutive month on Thursday, offering its most optimistic view in two and a half years, thanks to improvement in business sentiment and robust consumer spending.
At the end of two-day policy meeting, the Bank of Japan (BOJ) said in a statement that the Japanese economy is "starting to recover moderately," using the word "recover" for the first time since January 2011, two months before the March 11 earthquake-tsunami disaster devastated the country. In its assessment last month, the BOJ described the economy as "picking up." At the meeting, BOJ Governor Haruhiko Kuroda and his eight board colleagues also voted unanimously to maintain its aggressive policy introduced in April, of which goal is to achieve a 2 percent inflation target in two years. In April, the central bank decided to double the monetary base at an annual pace of about JPY 60-70 trillion (USD 600-700 billion) and the purchases of government bonds in two years to overcome the world's third-biggest economy's deflation that has lasted for nearly 15 years. The measures also include more purchases of risky financial assets, including exchange-traded funds and real estate investment trusts. "The BOJ will continue with the quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner," the central bank said in the statement. Exports have been picking up, while business fixed investment has stopped weakening and shown some signs of picking up, the BOJ said. Business sentiment has been improving and private consumption has remained resilient," it said. With regard to the outlook, the BOJ said Japan's economy is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies. It also pointed out risks to the country's economy, saying "there remains a high degree of uncertainty," including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the US economy. The central bank's drastic monetary easing steps are in line with Prime Minister Shinzo Abe's aggressive economic policies called "Abenomics," which aim to overcome deflation that has lasted more than 15 years and to boost the Japanese economy.