The bank's nine-member policy board, at the end of its two-day monetary policy meeting Thursday, said "Japan's economy is recovering moderately," and that it is "expected to continue" the moderate recovery, the bank's website reported.
The central bank also said the year-on-year rate of increase in the consumer price index is "likely to rise gradually." The bank has doubled its inflation target to 2 percent, needed to pull the economy out of its 15 years of deflation.
The board also decided unanimously that the bank "will continue with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner."
In announcing its assessment upgrade, the first such in two months for the world's third largest economy, the bank said overseas economies as a whole are gradually heading toward a pick-up, helping boost Japanese exports. The bank said business fixed investment is also starting to pick up as corporate profits improve, public investment continues to rise and consumer spending is also showing improvement.
The monetary easing policy, begun in April, is aimed at doubling the monetary base to achieve the targeted 2 percent inflation target in two years. Under the policy, the bank will conduct market operations at an annual pace of about 60 trillion to 70 trillion yen (about $600 billion to $700 billion).
The Wall Street Journal said the BOJ's report also would help gain support for a sale-tax hike from next year.
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