The Bank of Japan governor indicated July 14 there would be no immediate change in monetary policy when he said the nation's economy remains on a moderate recovery track and it is the central bank's priority to solidify the recovery.

Addressing a two-day meeting of BOJ branch managers at the bank's head office in Tokyo, Yasuo Matsushita noted the economy as a whole is on a slow recovery trend. Although negative effects of the April 1 consumption tax hike linger in personal consumption, the recovery is being supported by steady production and income, he said.

"There is little chance that the recovery trend of Japan's economy will be damaged," he said, adding that a recent slowdown in improvement is "temporary," and the pace of recovery needs to be closely monitored. "It is still important for the central bank to give policy priority to consolidating the ground for economic recovery," he said, hinting that the central bank will not immediately alter its current easy credit policy.

Since September 1995, the central bank has not changed the official discount rate, which it charges commercial banks, from its historic low 0.5 percent. The economy is seen as recovering, but only mildly and apparently providing little reason for the central bank to change its easy monetary policy, branch managers of the Bank of Japan agreed July 14 at their quarterly meeting.