Japan's central bank said in a monthly report for September today that the world's second-largest economy will continue its upward march, after leaving its stimulative monetary policy unchanged.
'Japan's economy is expected to continue to recover, gathering stronger momentum,' the Bank of Japan said in a statement. The outlook was unchanged from its August report.
The bank cautioned, as it has done in recent months, about high crude oil prices and their negative impact on Japan and other economies.
Japanese exports and industrial production in recent months have continued to increase, albeit at a slightly slower pace, while corporate investment in factories and offices has been increasing in tandem with improving corporate profits, the bank noted.
'Private consumption continues to show some positive movement' as the labour market is improving and a decline in household income is coming to a halt, it said.
The bank's price outlook was unchanged. 'Domestic corporate goods prices are expected to continue increasing for some time, partly due to the rise in crude oil prices,' it said. 'On the other hand, supply and demand conditions are likely to remain loose for the time being.'
'Under these circumstances, consumer prices are projected to basically continue falling slightly on a year-on-year basis,' the bank said.
Earlier today, the bank's policy board voted unanimously to leave its ultra-easy monetary policy unchanged, as widely expected.
The central bank has vowed to continue supporting the current economic recovery with a stimulative monetary policy until deflation gives way to mild inflation. At the same time, it is seeking to keep expectations of future interest rates at low levels to help borrowers.
