The Bank of Japan has given its most optimistic outlook in over two years, claiming an economic recovery is now underway.
It has been helped by the central bank's plan to keep its monetary policy steady, while the positive impact of the weakening yen is also assisting.
As was widely expected, the Bank of Japan decided to maintain its key policy of increasing the country's monetary base by 60 trillion yen ($599 billion) to 70 trillion yen per year. This will mostly be done through aggressive purchases of government bonds.
No major changes were made to its consumer inflation forecast, which will accelerate in the coming years to almost two per cent in the year ending March 2016.
The economy is starting to "recover moderately," the central bank said in a statement after revising up its assessment for the seventh month in a row.
It has raised its views on exports, business investment and industrial output as it looks more positively to the future.
By Claire Archer