Bank of Japan Gov. Toshihiko Fukui expressed a more positive view of the economy Thursday than he did three months ago, saying growth is likely to continue.

"Looking ahead, a sustained economic expansion is likely to continue, with a positive cycle of production, income and spending," Fukui said in a presentation at a quarterly meeting of BOJ branch managers.

With respect to monetary policy, Fukui avoided mentioning when interest rates may be hiked, saying only that the central bank aims to contribute to sustained growth and price stability by steering monetary policy via close monitoring of economic and price conditions.

But his bullish outlook suggests the BOJ is ready to raise the overnight call rate from near zero soon based on a "forward-looking approach," instead of a focus on past economic data.

Fukui said the supply-demand gap has been eliminated and demand will likely gradually exceed supply in the future.

The economy is steadily recovering and enjoys a good balance between external and domestic demand, as well as between the corporate and household sectors, he said.

The BOJ chief said exports are expected to continue to grow due to growth overseas. He did not mention the risk of a slowdown in the U.S. economy in the second half of the year.

He added that the core consumer price index, which excludes perishables, is likely to stay in positive territory.