Bank of Japan sees modest recovery in economy
The Bank of Japan (BoJ) has said the country's economy is "starting to recover modestly".
The upbeat assessment of the economy came as the BoJ left its huge monetary easing programme unchanged.
It is the first time the BoJ has described the world's third-largest economy as being on the path towards expansion in more than two years.
The bank is to stick to its plan of pumping more than 60tn yen ($606bn; £402bn) a year into the economy.
The programme is known as "Abenomics'' after Prime Minister Shinzo Abe, who took office late last year.
The BoJ has been flagging up steady improvements in the economy for the past six months, but Thursday's announcement is the first to point to a broad recovery.
"With regard to the outlook, Japan's economy is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies," the BoJ said in a statement.
Mr Abe appointed Haruhiko Kuroda, a veteran of international finance, as the governor of the BoJ in March with a promise to generate 2% inflation in two years.
Japan has been suffering from deflation for some years.
Economists are divided over the merits of "Abenomics", which is short on details of how Japan's massive public debts will be tackled or how certain industries will be made more competitive.
An election in the Japanese parliament's upper house set for 21 July is expected to serve as a litmus test for the public's approval of the policies, which have already sent the share prices higher and the yen lower in a big plus for exporters.