BOJ Ups Economic Prospects Of Regions Despite Inflation, Weak Yen

The Bank of Japan has upgraded its economic assessment of two of Japan's nine regions but became more cautious about another two, painting a mixed picture of the economy as it grapples with inflation and an inbound tourism boom amid a weak yen, Kyodo News reported.

Inflation's continued outpacing of wage growth cast a pall over the outlook, though economists expect the economy to rebound in the April-June quarter from a sharp contraction.

In the quarterly Sakura report on regional economies, the BOJ maintained the view that private consumption remains resilient and pay hikes are broadening.

However, inflation's continued outpacing of wage growth cast a pall over the outlook, though economists expect the economy to rebound in the April-June quarter from a

sharp contraction, Mainichi Shimbun also reported.

The economic assessment of the Hokuriku region was upgraded as it continued to recover from the aftermath of a deadly earthquake that hit Ishikawa and nearby prefectures on New Year's Day.

The Kinki region, which includes Osaka and Kyoto, both tourist spots, was upgraded partly because of an uptick in private consumption, including spending by foreign tourists in Japan.

Rising prices of everyday goods have already started to weigh on private consumption, which makes up more than half of the economy, leading two regions -- Hokkaido and Shikoku -- to see their evaluations cut.