The economy is recovering steadily and is expected to continue improving on the back of a positive cycle of rising production, income and spending, Bank of Japan Gov. Toshihiko Fukui said Tuesday.
“Exports and industrial production continue to rise while high profits allow companies to increase capital investment,” Fukui said in a speech at a quarterly meeting of BOJ branch managers.
Incomes also are increasing gradually, reflecting improvements in employment conditions and wage hikes, Fukui said at the one-day meeting, adding personal spending is also on the rise.
Looking ahead, the central bank chief said exports are expected to keep rising, spurred by the expansion of overseas economies, and domestic private demand is likely to continue to grow on high corporate profits and gradual income rises.
Fukui also said consumer prices are expected to keep rising in line with a dwindling supply-demand gap, an indication he’s confident it was the right decision to terminate the so-called quantitative easing policy March 9.
“The CPI is expected to continue to rise from the previous year’s levels, although it could accompany some fluctuations,” he said, referring to the national consumer price index, which excludes perishables.
The central bank will steer its monetary policy appropriately depending on economic and price conditions to achieve sustainable economic growth under price stability, Fukui said.
However, he did not say when the zero-interest rate policy would end — the biggest concern for the financial markets.
Following the branch managers’ meeting, the central bank released its quarterly report on the regional economies.
The BOJ raised its economic assessment of four out of nine regions, citing rising production and capital investment as well as improvement in employment conditions.
“Economic recovery is particularly evident in urban areas, but other regions also show recovery movements,” the report says.
Of the four, the economies in the Kinki region, centered on Osaka, and the Tokai region, which includes Nagoya, are enjoying expansion.
The economic assessment of the Kanto-Koshinetsu region was upgraded to “continues to recover steadily” and Hokuriku was moved up to “recovering steadily” from slightly weaker expressions in the January report.
The April report says all nine regions are more or less in recovery mode.