( Financial TImes ) -- The Bank of Japan has lifted its assessment of Japan 's economy , and underlined progress towards its price target by saying that inflation expectations `` appear to be rising . '' In an upbeat statement following a two-day policy meeting , the BoJ said the world 's third-largest economy is `` recovering moderately '' , boosted by a pick-up in exports and investment in fixed assets by companies on the back of higher profits . Public investment is also rising , it noted , while the housing sector is looking stronger . As such , the BoJ kept its main policy settings on hold , as it has done every month since April , when governor Haruhiko Kuroda unveiled what he called a `` new phase '' of `` quantitative and qualitative monetary easing . '' The aim is to hit a 2 per cent target for inflation by buying up huge amounts of assets , mostly longer-term bonds . This week the BoJ reported that Japan 's monetary base expanded 42 per cent from a year earlier in August , to Y172tn ( $ 1.72tn ) , marking an all-time high for the sixth straight month . Meanwhile , the balance of current accounts deposited at the BoJ more than doubled to Y84tn , as banks parked proceeds of bond sales . Analysts say that the BoJ is now at a delicate juncture in its easing programme , where it is hoping that so-called `` bad inflation '' caused by the drop in the yen since late last year is gradually replaced by `` good inflation '' , signalling a virtuous cycle of demand . For now , the evidence is mixed . The Japan-style core measure of consumer price inflation , which excludes food but not energy , climbed to 0.7 per cent in July , its highest level in nearly five years . The US-style core measure , which strips out both food and energy , is also on a rising trend but is still negative , at minus 0.1 per cent in July . Prices for items such as housing , furniture and medical care all fell from a year earlier . Meanwhile , lending activity is still relatively subdued , with total loans rising 2.2 per cent in July . Base salaries are generally flat , or falling . However , prices are moving in line with the policy board 's forecasts , which means that the BoJ is under little pressure to do more to try to force the index higher . The onus now shifts to the government , say analysts , as it prepares to address some of the structural reforms set out in the growth strategy of Shinzo Abe , prime minister . Abe wants to make Japan a more competitive place to invest and to do business , thus stimulating employment , incomes and consumption . `` [ BoJ ] policy board members are continuing to shun 'incremental easing ' '' , said Izumi Devalier , economist at HSBC in Hong Kong . She expects the BoJ to leave monetary conditions unchanged for the remainder of the fiscal year to April . `` With the central bank out of the hot seat for now , the focus is squarely on the government . ''
The BoJ kept its main policy settings on hold , as it has done every month since April . But the central bank also said that it would keep buying government bonds to support economic growth and inflation in a bid to boost consumer spending amid signs of slowing growth. This week the BoJ reported that Japan 's monetary base expanded 42 per cent from a year earlier in August .