"It makes sense that the BOJ is upgrading the assessment as recent economic data are showing Japan's recovery is robust"
-Masamichi Adachi, senior economist at JPMorgan Chase & Co.
The Bank of Japan under Kuroda's leadership is likely to upgrade its assessment of the world's third largest economy, citing the overall economic improvement for the first time in more than two years. According to BoJ's current assessment, the economy is picking up, and during its two-day meeting ending July 11, Kuroda may reassess results of his stimulus programme. In this case it will be a seventh straight month of raising growth forecast, decreasing pressure on Prime Minister Shinzo Abe and the central bank's Governor Haruhiko Kuroda to boost confidence in a sustained Japanese recovery.
Keeping the pace of recovery will help Abe in an upper-house election due this month, as he is trying to consolidate support for his package of monetary and fiscal stimulus measures, known as Abenomics. In addition to that the BoJ published its price outlook report, expecting consumer price growth of 1.4% in fiscal 2014 and 1.9% in the next year, factoring out the effects of the planned consumption tax hike. Therefore, Kuroda is confident in reaching his 2% inflation target in about two years, adding to evidence the economy is on the right track.
© Dukascopy Bank SA