The Japanese government repeated on Monday the nation's economy is recovering despite weak industrial output, while some cabinet ministers were wary about recent rises in long-term interest rates.
The monthly report came as government bond yields fell and the yen weakened to a record low against the euro on comments by Bank of Japan Governor Toshihiko Fukui on Friday that made a rate hike before August unlikely.
Revised data showed last week that Japan's economy grew an annualised 3.3 percent in January-March, outperforming both the United States and the eurozone for the second straight quarter.
The current growth phase that began in early 2002 is now the longest post-war growth period, although the pace of expansion has been much more modest than previous booms.
The Bank of Japan also maintained its view on the economy in its own monthly report on Friday, saying the economy was expanding moderately. After leaving its key interest rate unchanged at 0.5 percent, BoJ Governor Toshihiko Fukui said on Friday that the BoJ needed more proof of sustained economic expansion before lifting rates. Traders took Fukui's cautious comments as suggesting that the central bank was in no hurry to raise rates.
A Reuters poll showed on Friday that a majority of market participants expect the BoJ to raise interest rates to 0.75 percent in the third quarter, most likely in August.
A separate research report by a government official showed that Japan's output gap, a measure of the balance of supply and demand in the economy, was a revised plus 0.9 percent in January-March, a sign that inflationary pressure may be on the rise.
In its monthly report, the government slightly upgraded its assessment of personal consumption, saying it was picking up. In its May report, it said there were "signs" that personal con its view on output, saying in the report that production was flat.