Neil DennisThe Bank of Japan reported an upbeat assessment of the country's regional economies on Monday thanks to growth in production, exports, domestic consumption and sales of durable goods and luxury items.
Published quarterly, the central bank's Regional Economic Report also noted growth in construction and the manufacture of production machinery as public spending on disaster relief programmes and public construction orders increased.
Economic expansion
Six of the BoJ's nine regions said their economies had been expanding moderately or turning towards moderate expansion, while three noted their economies had continued to recover moderately.
The bank noted that income and spending had firmed as labour markets steadily tightened and private consumption "increased its resilience". Thanks also to economic growth globally, exports were trending higher.
BoJ governor Haruhiko Kuroda remains steadfastly dovish despite regional growth - Source: Wikimedia CommonsBank governor Haruhiko Kuroda told reporters at the press conference accompanying the report that the country's economy was expected to "continue expanding moderately".
Assessment upgraded
The BoJ upgraded its economic assessment of five its regions and maintained an optimistic appraisal of the other four.
Separately, Japan's "economy watchers" measure of business confidence improved in June for the third consecutive month.
The so-called economy watchers are workers whose jobs are sensitive to economic conditions in Japan, such as construction workers, restaurant staff and taxi drivers, and the index based on their assessments rose to 50 in May from 48.6 in April.
A greater than 50 reading indicates that those who report improving conditions outnumber the pessimists, and vice versa.
Improvements in auto sales, personal goods, hotel and flight bookings all contributed to growth in the index after a poll of nearly 2,000 workers.
Doves remain in charge
Despite the improving outlook, Kuroda remained steadfastly committed to ultra-loose monetary policy, reinforcing the need for inflation to get back above the bank's 2% target rate.
"Kuroda has been very vocal about his intention of ploughing ahead with his aggressive QE policy," said Jane Foley at Rabobank.
She added: "Last week the BoJ offered to buy an unlimited amount of 10-year notes, reinforcing its dovish policy intentions."
Canada turning hawkish
One central bank that does appear to be about to join the select few currently displaying hawkish policy intentions is Canada.
Governor Stephen Poloz and his deputy Carolyn Wilkins have been gradually talking the markets around to rate tightening, and a quarter point interest rate increase has been all but priced in for Wednesday's policy meeting.
Market reaction
Thanks to BoJ Governor Kuroda's continued dovishness, the yen has weakened by 2.5% against the dollar during the past month, and fell 0.3% on Monday to Y114.23 after a report on falling machinery orders in May.
The yen, however, is up 2.9% since the start of the year.
Increasing hawkishness at Canada's Reserve Bank has seen the Canadian dollar jump 5.9% against the dollar sine the beginning of May. It was down 0.3% on Monday, however, at C$1.2921.