The Bank of Japan said Thursday that a moderate recovery remains underway in all regional economies, upholding previous upbeat assessments because of the expectation that cheaper oil will spur consumption.
In its quarterly report, the central bank kept steady its evaluations of eight of nine regional economies, citing the fading impact of the consumption tax hike last April, a pickup in demand both at home and overseas, and a continued improvement in employment and salaries.
Hokkaido was the only region which got a downward revision, because of a decline in public investment there. Still, even that economy is showing moderate recovery, the report said.
“All regions, including the Hokkaido region, reported that the economy had been recovering or recovering moderately as a trend,” it said.
The central bank’s assessments come at a time when Prime Minister Shinzo Abe is seeking to address one of his biggest challenges — growth beyond Kanto and Kansai.
His “Abenomics” economic policies provided a big boost to major manufacturers by lowering the value of the yen and sparking a bull market for stocks. But this has plagued smaller firms in the provinces by raising the cost of imported materials at a time when consumer spending took a hit from the consumption tax hike.
The Cabinet tried to aid regional economies with a ¥3.5 trillion emergency economic stimulus package last month.
In his first meeting with BOJ branch managers this year, Gov. Haruhiko Kuroda said earlier in the day that Japan’s economy is continuing to recover moderately as the impact of the consumption tax hike eases.
Kuroda reiterated his pledge to continue the ultraloose monetary policy to achieve the inflation target of 2 percent, even as cheaper oil could in the short term hamper those efforts.
The BOJ “will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate,” Kuroda said at the meeting.
The central bank will convene a two-day policy meeting on Tuesday. Sources say board members may consider lowering the BOJ outlook on the consumer price index for fiscal 2015 in light of sliding oil prices.
But the BOJ is expected to maintain its ambition of obtaining 2 percent inflation by March 2016.