The Bank of Japan raised its forecasts for economic growth and consumer prices on Friday, while reiterating its pledge to double the monetary base in two years.

Releasing its outlook for economic activity and prices, the central bank said Japan's economy is expected to return to a moderate recovery path around mid-2013.

The improvement will be supported by resilient domestic demand and growth in overseas economies. "The economy has stopped weakening and has shown some signs of picking up," BoJ said in the report.

The bank upgraded its gross domestic product forecast for fiscal 2013 to 2.9 percent growth from the January projection of 2.3 percent growth. For fiscal 2014, growth is seen at 1.4 percent, stronger than previously forecast 0.8 percent.

Year-on-year rate of change in core consumer price index, that excludes fresh food, is expected to turn positive in fiscal 2013 and remain a little higher than projected in January.

The BoJ now expects core CPI to rise 0.7 percent in fiscal 2013 percent compared with the January forecast of 0.4 percent. The outlook for fiscal 2014 was also raised and the bank expects prices to rise 3.4 percent, faster than 2.9 percent increase projected previously.

By fiscal 2015, core inflation is expected to be around 2.6 percent. Excluding the effects of a planned hike in consumption tax, consumer prices are forecast to rise 1.4 percent in fiscal 2014, higher than previous prediction of 0.9 percent.

The bank expects inflation, excluding tax hike effects, to reach 1.9 percent in fiscal 2015, close to the central bank's target of 2 percent inflation.

RTTNews