The BOJ in its quarterly report, however, noted that uncertainty over the US’s political and economic outlook under President Donald Trump had led to some companies being wary about raising their investment levels and boosting overall capital expenditure.
The report intimated that Japanese businesses in Europe and those with offices or plants in Britain were also hesitant to increase investments due to Britain triggering Article 50 recently and beginning the process for it to leave the EU.
But despite current and potential economic headwinds, BOJ governor Haruhiko Kuroda said that the Japanese economy was “continuing to recover moderately as a trend,” and is “expected to turn to a moderate expansion” looking ahead.
At the quarterly meeting of the central bank’s regional branch managers, Kuroda also said that the BOJ would adjust monetary policies if necessary, referring to its yield curve control policy, aimed at keeping the 10-year government debt yield around zero percent by adjusting the amount of its bond buying.
The bank plans to keep intact its negative interest rate at minus 0.1 percent, Kuroda added, as part of the central bank’s massive stimulus programme and ultra-loose monetary policy.
As for the bank’s 2 percent inflation target, Kuroda recently said the inflation trend has been moving sideways and manoeuvres henceforth will continue to be made to hit the price target as early as possible.
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He said the BOJ will continue to promote powerful monetary easing under the yield curve control framework to achieve its price target at the earliest date possible and while the underlying trend of inflation needed to be examined, the overall yield curve will not be changed rashly.
The BOJ since September adopted a yield control curve policy which functions to keep long-term interest rates exceedingly low by adjusting the amount of its bond purchases.
The policy has come under scrutiny and criticism recently for its durability and sustainability, as yield and debt prices move inversely to each other.
Kuroda has said some market participants believe core consumer inflation will approach 1percent in the second half of this year, adding that he believes this might happen too. But the bank will not automatically raise its yield target just because this happens, he said.
The central bank, meanwhile, upgraded its assessment on the economy in the Hokuriku region which lies on the the Sea of Japan, as the new Hokuriku Shinkansen Line bullet train service which links the area to Tokyo has paid dividends.