BOJ lifts economic views on 2 regions, impact of quake uncertain

The Bank of Japan on Thursday stuck to its view that the economy is recovering, upgrading its views on two of the nine regions, despite uncertainty over the broader economic impact of an earthquake that struck central Japan early this month.

In the Sakura report, Kinki centering on Osaka was the only region whose economic view was downgraded. It maintained the assessments of the remaining six, including the Tokyo area.

The report is among key materials that the BOJ will scrutinize when it holds a two-day policy-setting meeting from Jan 22.

On the prospect of wage growth, a key factor for the BOJ in guiding monetary policy, the central bank noted that the momentum for pay hikes is building sooner than last year in regional areas. But it said uncertainty is high over the spread and pace of wage growth, particularly among smaller firms.

Japan's economy has been supported by a revival of inbound tourism and increased demand for services. Rising prices of everyday goods, however, are raising concern that consumers will become frugal, the BOJ said.

© Kyodo News