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BOJ Offers Most Bullish View on Regional Economies in Over a Decade

10 Jul 2017 5:46 am
   By Megumi Fujikawa 

TOKYO--The Bank of Japan raised its view on five of the nation's nine regional economies in a quarterly report released Monday, citing a recovery in production and a tightening job market in its most bullish regional assessment in more than a decade.

The central bank referred to an "expansion" in its view on six regions for the first time since the central bank started compiling its regional economic report in April 2005.

The so-called "sakura report"--Japan's equivalent of the Federal Reserve's Beige Book--signals greater confidence in the economy ahead of the BOJ's policy meeting next week. The bank will update its quarterly growth and price forecast at the meeting and the latest sakura report points toward the possibility that the bank will again raise its overall economic assessment.

Still, despite the continued signs of improvement in the economy, the BOJ is expected to keep its ultra-easy monetary policy on hold, given continued sluggishness in prices. Japan's core inflation rose just 0.4% in May compared with the bank's target of 2%.

"The economy is expected to continue a moderate expansion," BOJ Gov. Haruhiko Kuroda said earlier in the day at the opening of the branch managers' meeting.

The bank last raised its economic assessment in April, using the term expansion for the first time since early 2008, before the peak of a global financial crisis. The central bank has said the overall Japanese economy is "turning toward a moderate expansion."

The BOJ's successful move to keep a lid on yield rates on Friday, also suggests the bank will likely stick with its current policy settings.

The benchmark 10-year Japanese government bond yield rose above the BOJ's target of around zero last week in tandem with rises in overseas bond yields. The central bank took action in the market by increasing regular JGB purchases and offering to buy unlimited amounts of JGBs at a fixed rate.

The 10-year yield slipped back to 0.085% on the BOJ's move, after previously hitting 0.105%, its highest since Feb. 3.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com.

(END) Dow Jones Newswires

July 10, 2017 01:46 ET (05:46 GMT)

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