The Bank of Japan (BoJ) left unchanged its assessment in its February report, saying the economy is now showing a "steady" recovery. It also expressed confidence that deflationary pressures which have plagued the Japanese economy for years now, are easing.
"Japan's economy continues to recover steadily," the bank said in the Feb report, the same phrase used in its January report. In Jan the central bank made the first upward revision to its assessment in five months, using the word "steady" to describe the nature of the country's recovery.
In its Feb report the bank pointed to continued brisk industrial production, exports and solid consumer spending. "Exports and industrial production have continued to increase," the BoJ said.
In the latest available data for December, industrial output registered its fifth straight month-on-month rise.
Meantime, the central bank said fixed investment by business continued to increase, while housing income rose moderately. It expressed strong confidence that the rebound in the economy will be sustained going forward.
"Exports are expected to continue rising against a background of expansion in overseas economies," the BoJ said.
"Domestic private demand is likely to also continue increasing given high corporate profits and the moderate rise in household incomes." The BoJ noted that pressure from structural adjustments, such as "excess debt held by firms has almost dissipated," removing one of the contributing factors to deflation.
The central bank also remains optimistic about the outlook for prices in the near term.
"As for the year-on-year rate of change in consumer prices, a positive trend is projected to be established, as supply-demand conditions continue improving gradually and the effects of the reduction in telephone charges dissipates," the BoJ said.
Earlier today the central bank's board members voted 7-2 to keep the bank's ultra-easy credit policy unchanged, as expected. The policy which has been in place for nearly five years and effectively acts to keep interest rates at zero pct is aimed at helping the nation win its battle against deflation.