Japan’s central bank refrained from boosting stimulus and raised its view of business investment as the economy shows signs of weathering the impact of the first sales-tax increase since 1997.

The Bank of Japan will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($595 billion to $694 billion) per year, it said in a statement Wednesday in Tokyo, in line with forecasts of all 32 economists in a Bloomberg News survey.

While an economic contraction is projected for this quarter, companies’ plans to boost investment are adding to signs that growth may bounce back. Gov. Haruhiko Kuroda is chasing a 2 percent inflation target, with economists forecasting that more monetary loosening will be needed by the end of the year to achieve the goal. 

“The BOJ is becoming increasingly confident, and they have no intention to ease right now,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “We don’t think the BOJ will reach its target in the next year, so when it acknowledges its failure, it will have to ease further.”

The Topix index headed for a fourth decline in five days, as the yen strengthened. The benchmark stock gauge was down 0.6 percent as of 1:54 p.m. in Tokyo, while the Japanese currency rose 0.1 percent to 101.19 per dollar.

Japan’s trade deficit shrank in April as imports rose the least in 16 months after the sales-tax increase, data Wednesday showed. Overseas shipments increased 5.1 percent from a year earlier. The BOJ Wednesday maintained its view on exports, saying they “have recently leveled off more or less.”

The economy is forecast to shrink an annual 3.4 percent this quarter after 5.9 percent growth in the first three months of the year as the 3 percent tax increase depresses spending. Department store sales fell 12 percent in April, less than a 14 percent decline in April 1997 following the previous increase in the levy.

Gauges of business spending to consumer sentiment indicate the setback to the world’s third-biggest economy could be short-lived.

Machinery orders ― a leading indicator of private capital expenditure ― rose at the fastest pace since 1996 in March and companies plan further increases this quarter after corporate spending helped drive growth in the January-March period at the fastest pace since 2011.

Investment “has increased moderately as corporate profits have improved,” the BOJ said in a statement, revising a view in its outlook report on May 1 that “the pickup in business fixed investment has become increasingly evident as corporate profits have improved.” (Bloomberg)