The Bank of Japan upgraded its economic assessments for the most regions in more than a year, in a sign of growing confidence in the recovery as market speculation over potential policy adjustments continues to percolate.
(Bloomberg) — The Bank of Japan upgraded its economic assessments for the most regions in more than a year, in a sign of growing confidence in the recovery as market speculation over potential policy adjustments continues to percolate.
The BOJ raised its economic view for six of nine areas, the most since July 2022, according to its quarterly report Thursday following its branch managers’ meeting. The assessments for the remaining three regions were kept unchanged.
Fresh evidence of rising confidence related to local economies sets a positive tone ahead of the release later this month of updated quarterly economic projections. The so-called Sakura Report indicates the BOJ is making progress toward achieving a virtuous economic cycle.
The market seems to share that view, as yields on 10-year government bonds rose to a decade high Thursday, a move driven by a selloff in the US Treasury market as well as speculation of an approaching BOJ policy change.
“All nine regions reported that their respective economies, despite being affected by a slowdown in the pace of recovery in overseas economies and by price rises, have been either picking up or recovering moderately,” the BOJ said in the report.
A separate report on branch managers’ views stated that there were concerns among some businesses that a recent oil price increase and the weakening of the yen will possibly become factors pushing up their running costs.
The BOJ is likely to discuss raising its inflation projections for fiscal years 2023 and 2024 in the quarterly projections to be released on Oct. 31, people familiar with the matter told Bloomberg earlier this month. That’s when the bank will also deliver a policy decision.
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