The Bank of Japan is expected to offer a more upbeat view of the economy than it did last month at its next rate review, people familiar with the matter said, as robust exports and factory output support recovery in the world's third-largest economy.
But the central bank will stress its resolve to maintain its massive monetary stimulus, as the export-driven recovery has yet to boost private consumption and inflation, the sources told
"The economy is doing quite well. The problem is it's not translating into higher prices," one of the sources said, conceding that underlying inflation remains "surprisingly weak."
"Exports and output are gathering momentum," another source said, adding that a recent slew of positive data has heightened the chance the BOJ will upgrade its economic view.
Last month, the BOJ said Japan's economy is "recovering moderately as a trend." The central bank will likely remove the phrase "as a trend" to signal its confidence that the recovery is gaining momentum, the sources said.
The BOJ is also likely to offer a more optimistic view on exports and output than in March, when it said they were "picking up," the sources said.
The BOJ is widely expected to keep monetary settings unchanged at its two-day rate review that ends April 27. At the meeting, it will also review its quarterly projections and its assessment of economic and price developments.