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The Bank of Japan started a two-day policy meeting Wednesday, with policymakers likely to consider upgrading its assessment of the Japanese economy for the seventh consecutive month amid improvement in corporate sentiment and solid consumer spending.
The nine-member policy Board is expected to mull whether to add the word "recovery" to its statement to be released after the meeting. It would be the first time in two and a half years since January 2011 for the central bank to use the term "recovery" in its economic assessment.
The move comes after the BOJ's Tankan quarterly survey showed that business confidence among large Japanese manufacturers returned to positive territory in June for the first time in seven quarters, boosted by recovering exports amid a weakening yen and improving U.S. economy.
Sales at department stores are also increasing, as rising stock prices have stirred hopes for an economic recovery.
In its statement released after the previous policy meeting in June, the BOJ said the Japanese economy "has been picking up." The policymakers are likely to discuss whether the central bank should upgrade the assessment by using an expression such as the economy "is recovering moderately."
Meanwhile, some within the BOJ believe any change in wording should be weaker this time and the central bank should wait until it can further assess economic data, including for April-June gross domestic product due out in mid-August, sources close to the matter said.
The BOJ is expected to maintain its goal introduced in April of achieving a 2 percent inflation target in two years with ultraloose monetary policy centering on doubling the monetary base and boosting purchases of government bonds to beat deflation.
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