The Bank of Japan on Monday lifted its economic assessment of three of the country’s nine regions, citing a pickup in consumer spending.
“The effects of the decline in stock prices after early 2016 and of the irregular weather seen that summer has waned,” the central bank said in its quarterly Sakura Report.
The upgraded regions were Tohoku, Kanto-Koshinetsu and Tokai.
The yen’s recent softening against other major currencies was also viewed as playing a part, particularly in Tokai, the region where exporters like Toyota and its suppliers are based.
“The economy has been expanding moderately,” the BOJ report said, dropping the phrase “albeit at a somewhat reduced pace” used in its previous report on Tokai in October.
Although production in Tohoku and Kanto-Koshinetsu was said to be affected by slowing emerging economies in October, that wording was absent in Monday’s report.
The remaining six regions are Hokkaido, Hokuriku, Kinki, Chugoku, Shikoku and Kyushu-Okinawa.
The Sakura Report was released after a meeting of BOJ branch managers. It is named for cherry blossoms and regarded as the Japanese version of the U.S. Federal Reserve’s Beige Book.
The economy as a whole has been recovering moderately but lacked strength amid weak corporate and consumer spending. In the face of lower crude oil prices and a strong yen, the BOJ has struggled with its 2 percent inflation target.
BOJ Gov. Haruhiko Kuroda told the branch managers that the central bank will continue its monetary easing to achieve the target.
Despite uncertainties about U.S. economic policy under President-elect Donald Trump, the economy will “shift to moderate expansion,” Kuroda added.
Since September, the BOJ has been trying to keep the 10-year government bond yield target at around zero percent, putting more focus on interest rates.
The core consumer price index, excluding volatile fresh food prices, fell 0.4 percent in November from a year earlier for the ninth straight month of decline, suggesting the BOJ is still far from achieving its inflation target.
While acknowledging the year-on-year change in the index is likely to remain slightly below zero or around zero percent for the time being, Kuroda said the figure is expected to rise toward 2 percent in the future.