TOKYO, March 14 (Reuters) - Japanese factory output is expected to increase in January-March and continue to rise in the following quarter, mainly due to strength in auto production and increased demand related to reconstruction from last year's earthquake, the Bank of Japan said on Wednesday.
In its monthly economic report for March, the BOJ also said a reversal of yen rises, if sustained, would likely ease downward pressure on exports.
"There are signs output and public investment are picking up," the central bank said
In a statement issued after its policy-setting meeting on Tuesday, the BOJ said Japan's economic activity was more or less flat but showed signs of picking up. Its tone was slightly more upbeat than last month, when it said only that economic activity was more or less flat.
As widely expected, the BOJ refrained on Tuesday from easing monetary policy via an increase in asset purchases and instead expanded a loan scheme to encourage banks to fund prospective growth industries.
The BOJ issues its view on the economy in a statement published shortly after its policy decision, and offers a more detailed assessment in a monthly report released the following day.