BOJ Maintained Optimistic Forecast for Regional Japan

The Bank of Japan (BOJ) kept an optimistic forecast for its entire nine Japanese regions on Monday. While bank governor Haruhiko Kuroda expressed confidence that inflation will reach the bank’s target at 2 percent, which would likely indicate that monetary policy will remain on hold for some time.

According to the regional quarterly report, the BOJ stated that entire area under recovery or expansion because of the strong foreign demand, improvement in private consumption and tightening labor market. The central bank upwardly revised its estimate for capital expenditure for three among nine regions, stating that most of the companies boosted equipment spending to streamline operations amid the struggle to hire workers in a tight job market.

Also, the recent heavy rain in western Japan might have affected plant operations and good distribution but the general economic influence remains unidentified according to a BOJ official.

While massive money printing for more than five years supported the economy to reflate but failed to stir up inflation and continued to be lower than BOJ’s target. In line with the yield curve control policy ratified in 2016, the Japan’s central bank promises to manage short-term rates at minus 0.1 percent and zero percent for the 10-year government bond yield.

The regional report is one of the factors that the central bank will examine for the subsequent rate review from July 30 to 31. Moreover, Japan's government assessment took place last week presented that the economy is projected to expand faster versus expectations for private-sector in fiscal 2019.