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Last Updated: Tuesday, 9 May 2006, 06:33 GMT 07:33 UK
Bank of Japan 'to raise outlook'
Japanese businessmen walk past sign showing the strength of the yen against the dollar
A rate rise is expected by July
The Bank of Japan is planning to raise its assessment of the Japanese economy to "expanding" for the first time in almost 15 years, a report has said.

Japan's Jiji Press news agency estimates that the central bank could make the significant revision at its next policy meeting on 19 May.

Such a move could also see the Bank of Japan raising interest rates after five years at a zero level.

The report kept the yen at eight-month highs against the dollar on Tuesday.

One US dollar is now worth approximately 111 yen.

At present the Bank of Japan has only gone as far as describing the economy as "recovering", but there are now growing signs that the economy is expanding strongly.

Japan's consumer price index hit eight-year peaks last month, while the country's jobless rate stayed at 4.1%, its lowest level in eight years.

Most analysts expect the central bank to raise interest rates by July at the latest.

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