TOKYO, July 11 (Reuters) - The Bank of Japan kept monetary policy steady on Thursday and offered a more optimistic view of the economy on growing signs that the positive effects of a weak yen and the government’s reflationary policies are widening.
In a quarterly review of its long-term growth estimates, the central bank made no major changes to its forecast that core consumer inflation will accelerate in the coming years to near 2 percent in the business year to March 2016.
As widely expected, the BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen ($600 billion-$700 billion).
“Japan’s economy is starting to recover moderately,” the BOJ said in a statement, revising up its assessment for a seventh straight month. Last month, it said the economy was “picking up”.
BOJ board member Takahide Kiuchi proposed that the central bank make its 2 percent inflation target a medium- to long-term goal, and commit to intensive easing in the next two years. This would differ from the BOJ’s current commitment to hit its inflation target in roughly two years.
Kiuchi’s proposal was rejected in an 8-1 vote.
BOJ Governor Haruhiko Kuroda will hold an embargoed news conference from 3:30 p.m. (0630 GMT) with his comments expected to come out any time after 4:15 p.m. (0715 GMT).
The BOJ stunned markets by offering an intense burst of monetary stimulus in April, pledging to double the supply of money in two years by boosting purchases of government bonds and risk assets.
In doing so, it switched its policy target from the overnight call rate to base money, a broad measurement of the amount of money the central bank pumps into the economy.
The BOJ issues its long-term economic and price forecasts in April and October of each year, and reviews them in January and July based on latest developments in the economy.