TOKYO Bank of Japan board members saw improvements in exports, consumer spending and capital expenditure but warned that it may take time for inflation expectations to pick up, a summary of opinions from their Jan. 30-31 meeting showed on Wednesday.
Members also believed it was appropriate for the BOJ to maintain its current ultra-easy policy, with one member even arguing that the central bank should not change policy hastily.
"Since the second half of 2016, Japan's economic recovery has strengthened," one of the nine board members was quoted as saying. "Positive synergy effects are being produced by improvement in overseas economies, economic stimulus measures by the government, and enhanced monetary easing."
However, there was a sense of caution in the summary of opinions as members expressed concerns over uncertainty surrounding the Trump administration's policies and about Britain's exit from the European Union.
The BOJ kept policy on hold and raised its growth projection and, but warned that its 2 percent inflation target remained elusive.
Consumer spending struggled for the first half of last year, but policymakers were encouraged by the fact that consumer spending has since started picking up, the summary of opinions showed.
A turnaround in exports is also encouraging because Japan relies on trade demand for growth.
New U.S. President Donald Trump has suggested he will adopt protectionist trade policies, and some economists say this poses a threat to Japan because it exports large numbers of cars and car parts to the United States.
One BOJ board member said traders could start to question the central bank's ability to control the yield curve during a bout of heightened uncertainty and the BOJ's market operations desk would need more flexibility.
In September, the BOJ revamped its policy target to interest rates from the pace of money printing and is buying government debt to keep the 10-year bond yield around zero percent.
However, 10-year bond yields have faced upward pressure from a rise in overseas yields.
(Reporting by Stanley White; Editing by Eric Meijer)