But sources familiar with the central bank's thinking point out that the central bank may maintain a partisan tone, fearing that rising overseas risks will threaten the export-dependent economic recovery.
Output gap data and a short-term survey released by the Bank of Japan on Monday will be a factor for the bank to consider in detail whether economic growth will rebound in the second half of this year. Short-term survey results show that corporate confidence has deteriorated significantly.
"The adverse effects of China's economic slowdown have not yet impaired capital expenditure," said one of the unnamed sources. "But the development of overseas situation, especially China's performance, will be the key to the Bank of Japan's prediction of whether the situation can be achieved."
An estimate released by the Bank of Japan on Wednesday showed that Japan's output gap was positive 2.2% in October-December, maintaining a positive value for the ninth consecutive quarter.
This figure is higher than 1.26% in the previous quarter and is the positive value of the largest output gap since 1992.
The output gap is positive, which means that the actual output of the economy is higher than the full-load capacity. The factories and workers are overloaded to meet strong demand.
In theory, the rising positive output gap should lead to increased inflationary pressures, but the Bank of Japan acknowledges that structural factors will restrain price increases for longer than expected.
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