BOJ upgrades view on all regions, signals policy pause
By Leika Kihara
TOKYO (Reuters) - The Bank of Japan upgraded its assessment for all nine regions of the economy for the first time in nearly three years on Thursday as robust private consumption and spending on rebuilding from last year's earthquake underpinned growth.
The move underscored the view that the BOJ will keep monetary settings unchanged next week, barring any fresh bout of volatility in global financial markets.
BOJ Governor Masaaki Shirakawa warned that Europe's debt crisis remained the biggest risk to Japan's economy and could potentially affect its financial system, signaling readiness to act if any market turmoil threatens the fragile recovery.
But he stuck to the BOJ view that the world's third-largest economy is on the mend as exports and factory output pick up, suggesting that the central bank sees little need to offer the economy additional stimulus for now.
"Global financial markets remain jittery over worries about Europe's debt problem, so we need to keep a close eye out for the time being," Shirakawa said in a speech to a quarterly meeting of the BOJ's regional branch managers on Thursday.
"Japan's economy, for its part, is gradually starting to pick up on firm domestic demand due to reconstruction spending."
In a sign the positive momentum was broadening, the central bank revised up its assessment for all nine regions of the economy in a quarterly report, the first time it has done so since October 2009.
"Many regions said their economies have been recovering moderately or picking up," the central bank said in the report, which was issued at the meeting of regional branch managers. Continued...