The Bank of Japan on Monday raised its assessment for five of the country’s nine regional economies amid strong exports to Asia.
The BOJ used the word “expansion” to describe six of the regional economies, the most since it began releasing the Sakura Report, named for its cherry blossom-colored cover, in 2005.
Reasons for the assessment upgrade included strong demand for electronic components such as those used in smartphones as well as manufacturing equipment in China, Taiwan and Southeast Asia.
Some BOJ branches also reported a pickup in household spending on big-ticket items such as cars and electrical appliances.
“Budget-minded consumers have been slow to change their habits,” a central bank official said at a briefing. “We aren’t at a high level of consumption yet, but it’s slowly getting firmer.”
Nationwide inflation has been minimal despite more than four years of ultraeasy policy. The BOJ’s key inflation gauge, the core consumer price index, rose just 0.4 percent in May from a year earlier.
The figure has been propped up by a global rise in oil prices, while companies remain reluctant to raise prices for fear of losing customers as consumers have hesitated to increase spending amid tepid wage growth and ongoing concerns about lifetime financial security.
The report, Japan’s equivalent of the U.S. Federal Reserve’s Beige Book, is released after quarterly meetings of the BOJ’s branch managers.
The nine regions, from north to south, are Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa.
BOJ Gov. Haruhiko Kuroda said earlier in the day that the national economy is on track for a moderate expansion.
He also said inflation is expected to rise toward the central bank’s 2-percent inflation target.
The BOJ will maintain its ultraloose monetary policy including government bond purchases and a negative short-term interest rate until the inflation goal is achieved, he said.
Kuroda also said a narrowing in the gap between supply and demand, as well as a rise in longer-term inflation expectations among the public, will push the inflation rate toward 2 percent.
He reiterated that the BOJ will adjust policy as necessary to maintain such upward momentum.
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