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BOJ sees economy starting to 'recover'
Aggregated Source: Shanghai Daily: Business

JAPAN'S central bank yesterday struck an optimistic note about the economy, using the word "recover" for the first time in more than two years and pointing to a pick-up in investment as well as consumer and business confidence.

The Bank of Japan left its vast monetary easing program - a huge bond-buying scheme unveiled in April - unchanged, saying the situation for the world's No.3 economy was looking up.

"Japan's economy is starting to recover modestly," BOJ governor Haruhiko Kuroda told a press conference after a two-day policy meeting.

The comment was seen as a notch stronger than its previous assessment that the "economy has been picking up."

"With regard to the outlook, Japan's economy is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies," the BOJ said in a statement.

Kuroda pointed to a rise in business and public investment, private consumption and industrial production, while noting that exports also picked up.

BOJ board members slightly adjusted their growth forecasts, with their fresh median forecast registering at 2.8 percent in a range of 2.5 to 3.0 percent growth.

In April, their median forecast was 2.9 percent growth, in a range of 2.4 to 3.0 percent growth.

The moderate change came as the rest of the world was performing weaker than expected, while the Japanese domestic economy did better than anticipated, Kuroda said, adding that the growth rate and inflation were moving "broadly in line with the April forecasts."

In April BOJ unveiled a multibillion-dollar bond-buying scheme - similar to the US Federal Reserve's - aimed at kickstarting growth in the limp economy and bringing an end to deflation.

Business confidence among Japan's biggest manufacturers surged in the past three months, a closely-watched central bank survey showed earlier in July, in the latest sign of an uptick in the economy.

The public has largely cheered the economic initiatives of Prime Minister Shinzo Abe, who came to power in December and has offered a series of huge government spending pledges that run in tandem with monetary easing.

The two policies have driven down the value of the yen and given a fillip to exports.

But news that the bank would hold off any more policy moves sent the yen higher against the dollar, adding to gains made in New York after the US Fed indicated its own easy-money policy would be kept in place for some time.

Abe appointed Kuroda, a veteran of global finance, as the central banker in March with a vow to target 2 percent inflation in two years in a country long beset by growth-sapping deflation.

Economists are divided over the merits of "Abenomics," which are so far a little short on details of how Japan's massive public debts will be tackled.


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Copyright Shanghai Daily: Business