The Bank of Japan has raised its assessment of the world's second largest economy, citing rising exports and increased corporate investment. This is the second time in three months that the central bank has upgraded its view. The latest upgrade follows figures last week showing that the economy grew in the second quarter at its fastest pace in more than two years and outperformed both the eurozone and the US. While economic activity continues to be "virtually flat as a whole," the bank said, "signs of improvement have been observed in such areas as the environment for exports". But the bank cautioned that attention needs to be paid to interest rate movements. The bank's nine member policy committee decided last week to keep interest rates at zero to assist a recovery from Japan's third recession since 1991. Japanese interest rates have been at zero since March 2001. Consumer prices will decline at the current "moderate" pace, the bank said today, although price declines may slow temporarily.///www.fxcentre.com