Bank of Japan Governor Toshihiko Fukui said public-sector reform is vital to domestic economic growth. Fukui was asked at a press conference if he was concerned by the defeat of legislation to begin privatizing Japan Post over a 10-year period in 2007, the centerpiece of Prime Minister Junichiro Koizumi's economic reform initiatives. "Public-sector reform is crucial for the development of the Japanese economy," the central bank chief said, but added he sees no short-term economic impact from the defeat of the legislation in an upper house vote yesterday. In fact, in other comments Fukui painted a promising outlook for the Japanese economy. At one point the BoJ HEAD was asked if he believed the economy has now emerged from the lull it slipped into in mid-2004 as export growth began slowing rapidly, leading to a troublesome build-up in inventories of unsold IT-sector products. "It's hard to say exactly when an economy is emerging from a lull. But I am almost certain that the economy is (now) emerging from the soft patch," Fukui said. He also reiterated that the monthly core nationwide consumer price index may stop falling from year-earlier levels by the end of this year. The nationwide core rate is the BoJ's primary gauge of price trends, and Fukui has repeatedly vowed that the central bank will maintain its four-year-old super-loose credit policy until the core rate turns positive for a prolonged period. Fukui was speaking at a press conference after the BoJ's policy board voted 7-2 today at the end of a two-day monthly meeting to keep the central bank's ultra-easy credit policy unchanged.