Kuroda Claims Success for Bank of Japan's Stimulus

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Shibuya district, Tokyo

Bank of Japan Governor Haruhiko Kuroda claimed some success for the central bank's aggressive monetary stimulus on Thursday, saying that the economy is on track to a steady recovery with signs inflation expectations are picking up.

Speaking at a quarterly meeting of the BOJ's regional branch managers, Kuroda also reiterated the central bank's commitment to maintain its ultra-easy monetary policy until its 2 percent inflation target is achieved in a stable manner.

"Japan's economy is steadily heading towards a recovery since we adopted our qualitative and quantitative monetary easing in April," Kuroda said.

(Read More: Is an Overconfident BOJ to Blame for Market Woes?)

"We're seeing the effect of our policies, such as indicators suggesting an increase in inflation expectations."

Kuroda also said core consumer inflation, which has remained largely flat, will gradually turn positive reflecting improvements in the economy.

His comments underscore the growing conviction within the BOJ that the economy is on track to meet the central bank's projection of a moderate recovery around mid-year, which will be the backdrop for the BOJ's monetary policy meeting next week.

(Read More: Should the Bank of Japan Have Done More?)

The BOJ is expected to stand pat at its rate review and may revise up its view of the economy, sources familiar with its thinking say, on growing evidence that the weak yen and the government's reflationary policies are supporting exports and private consumption.

The BOJ stunned markets on April 4 by setting in motion an intense burst of monetary stimulus, promising to double its bond holdings and boost purchases of risky assets to meet its 2 percent inflation target in roughly two years.

Japan's economy grew at an annualized 4.1 percent in the first quarter with exports in May rising at the fastest annual pace in more than two years, helped by robust auto sales in the United States and the benefits of a weak yen.

(Read More: Japanese Manufacturers' Sentiment Turns Positive)

Manufacturers' sentiment turned positive in the three months to June for the first time in nearly two years, a close-watched central bank survey showed on

Monday, a sign the recent market turbulence has yet to hurt the feel-good mood created by Prime Minister Shinzo Abe's "Abenomics" policies of aggressive monetary stimulus and fiscal spending.

(Read More: Will the Strong Tankan Send Abenomics Off Course?)

But the improvement in sentiment has yet to nudge companies to increase wages and jobs, casting doubt on whether the recent strength in consumer spending is sustainable. Wages showed no annual growth for the second straight month in May.

The BOJ's branch managers will issue a quarterly report on regional sectors of the economy at 2:30 p.m. (0530GMT), which will offer clues on whether the benefits of "Abenomics" are filtering through to broader sectors of the economy.