The Bank of Japan on Thursday decided to keep its monetary easing program unchanged, while it upwardly revised its assessment of the economy citing signs of recovery.
The nine-member policy board decided unanimously to keep the target of the monetary base expansion at an annual pace of JPY 60-70 trillion. The decision was in line with economists' forecast.
The massive monetary easing program was launched in April soon after Haruhiko Kuroda took charge as BoJ Governor. The program was aimed at reversing 15 years of deflation in the economy.
The central bank said the economy is starting to recover moderately, upgrading its assessment from June when it said "the economy has been picking up." The word "recover" was last used by the bank in January 2011, two months before the deadly earthquake and tsunami struck the island nation.
'Exports have been picking up' and 'industrial production is increasing moderately', the BoJ said.
At the same time, the central bank cut its inflation and growth forecasts slightly. The BoJ now expects gross domestic product to grow 2.8 percent in fiscal 2013, marginally lower than the April forecast of 2.9 percent.
The growth is seen to slip to 1.3 percent in fiscal 2014, down from previous forecast of 1.4 percent. The outlook for 2015 was also cut to 1.5 percent from the 1.6 percent predicted earlier.
The forecast for core inflation for the current fiscal year was revised down to 0.6 percent from 0.7 percent previously. The BoJ expects core consumer prices to increase 3.3 percent in fiscal 2014, slightly weaker than the earlier projection of 3.4 percent. The inflation forecast for fiscal year 2015 was kept unchanged at 2.6 percent.
While the year-on-year rate of change in the core consumer price index is currently zero, the BoJ has noted an increase in inflation expectations. The central bank has an inflation target of 2 percent.
The bank continues to expect the economy to recover moderately on the back of resilient domestic demand and a pick-up in overseas economies.
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