The members of the Bank of Japan's monetary policy board said that Japan was seeing a moderate economic recovery which is likely to continue, minutes from the board's March 10 and 11 meeting revealed on Friday.
The board members added that the country appears to finally be on the right track in its war with deflation, as inflation finally appears to be rising.
They did not, however, wish to undertake any action ahead of the new sales tax that has recently been enacted.
"Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike," the minutes said. "The year-on-year rate of increase in the CPI, excluding the direct effects of the consumption tax hike, is likely to be around 11/4 percent for some time."
At the meeting, the bank decided to leave interest rates unchanged at 0 to 0.1 percent, while also continuing to increase the monetary base at an annual pace of JPY 60 trillion to JPY 70 trillion.
Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects for the European debt problem, and the pace of recovery in the U.S, the bank said.
"The bank will continue with 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. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate," the minutes said.
Meanwhile, the BoJ downgraded its view on exports, but upgraded its assessment of industrial production and investment. Policymakers said shipments have recently leveled off more or less.
Upgrading its view on industrial production, the BoJ said output has been increasing at a somewhat accelerated pace. The bank also raised its assessment of investment, saying the pick-up in business fixed investment has become increasingly evident as corporate profits have improved.
"Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan's economy to overcome the deflation that has lasted for nearly 15 years," the minutes said.
Also on Friday, the BoJ said that the M2 money stock in Japan was up 3.5 percent on year in March, the Bank of Japan said on Friday - coming in at 863.6 trillion yen.
That was well shy of forecasts for 4.0 percent, which would have been unchanged from the February reading.
The M3 money stock came in at 2.9 percent to 1,174.3 trillion yen - also missing expectations for 3.2 percent, which would have been unchanged from the previous month.
The L money stock climbed an annual 3.7 percent to 1,531.8 trillion yen after collecting 4.2 percent a month earlier.
Finally, an index measuring the prices of domestic corporate goods in Japan was flat on month in March, standing at 102.8.
That missed forecasts for an increase of 0.1 percent following the upwardly revised 0.1 percent contraction in February (originally -0.2 percent).
On a yearly basis, prices added 1.7 percent - in line with expectations and slowing from 1.8 percent in the previous month.
Export prices were down 0.3 percent on month and 2.7 percent on year, the data showed, while import prices dipped 0.4 percent on month and 1.5 percent on year.
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Forex News
May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.