Members of the Bank of Japan's Monetary Policy Board said that the country' economic recovery remains on track, minutes from the bank's March 15 and 16 meeting revealed on Tuesday.
"Japan's economy has continued its moderate recovery trend. Overseas economies have continued to grow at a moderate pace, although emerging economies remain sluggish in part.
In this situation, exports have picked up," the minutes said.
At the meeting, Governor Haruhiko Kuroda and his board members decided by a 7-2 vote to maintain the central bank's target of raising the amount of outstanding Japan government bond holdings at an annual pace of about JPY 80 trillion.
The BoJ board also voted to retain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.
The central bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.
"The bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target," the minutes said.
The bank expects inflation to increase from about zero percent and become slightly positive, reflecting developments in energy prices. Inflation is forecast to rise toward 2 percent target thereafter.
The BoJ reiterated that the economy is likely to turn to a moderate expansion. According to the bank's assessment, domestic demand will follow an upward trend and exports would follow a moderate rising trend on the back of improving overseas economies.
The BoJ said some of the risks to Japan's outlook are the developments in the U.S. economy and the impact of its monetary policy on the global markets, developments in commodity-exporting economies, namely China and the consequences of United Kingdom's departure from the European Union.
Also on Tuesday, the BoJ said that the monetary base in Japan advanced 19.8 percent on year in April – coming in at 456.239 trillion yen.
That follows the 20.3 percent annual increase in March.
Banknotes in circulation added 4.2 percent on year, while coins in circulation gained 1.1 percent.
Current account balances spiked an annual 25.4 percent, including a 24.7 percent surge in reserve balances.
The adjusted monetary base climbed 10.5 percent on year to 448.484 trillion yen.
by RTT Staff Writer
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