Japan's low inflation expectations mean its short-term real interest rate, which is calculated by subtracting inflation expectations from nominal interest rates, remains higher than that of the United States, Iwata said.
The group consists of a state-backed fund, the Innovation Network Corp of Japan (INCJ), the Development Bank of Japan (DBJ), as well as U.S. private equity firm Bain Capital.
Service-sector mood rose to a two-year high, evidence of broadening confidence, although the Reuters Tankan also found that confidence was seen slipping over the next three months.
While the BOJ should maintain its ultra-loose policy, it should do so by focusing on capping long-term interest rates under its yield curve control policy, the IMF said.
The BOJ raised its economic assessment. It increased its real gross domestic product (GDP) growth forecast for the 2017-18 fiscal year to 1.6 percent from the 1.5 percent projected in January. But it lowered its core consumer price index (CPI) growth forecast to 1.4 percent from 1.5 percent in the same period.
Governor Kuroda will also dispel market speculation the BOJ is engaging in "stealth tapering" by stressing that the recent slowdown in the bank's bond buying is not intentional and simply the result of a stable bond market, say sources familiar with its thinking.
But while the central bank reached a major milestone in money printing, it is nowhere near achieving the ultimate goal of its policy, to lift inflation to 2 percent, highlighting the difficulty the BOJ is facing as the pace of its bond buying appears unsustainable.
The Reuters' monthly poll - which tracks the Bank of Japan's key quarterly tankan - showed confidence at service-sector firms hit a four-month high, a tentative sign of a pickup in domestic demand.
Positive data issued on Thursday should offer some relief to Bank of Japan policymakers, who hope the economy is now gathering enough momentum to drive up inflation that remains stubbornly below their 2 percent target.
"It will be difficult for the BOJ to adopt what it has to do for an exit strategy whoever takes the post," said Takeshi Minami, chief economist at Norinchukin Research Institute, who saw no reason to replace Kuroda.
Speaking at a lower house fiscal and monetary policy committee meeting, Kuroda affirmed yield curve control as the main focus of monetary policy.
Speaking in the lower house fiscal and monetary policy committee, Kuroda said that the BOJ would adjust policy if needed, but that the central bank had recently upgraded Japan's economic outlook and the global economy was growing stronger.
"Infrastructure needs are huge and it's simply not possible for the Asian Development Bank and the World Bank to fill the gap completely," Kuroda, who was formerly head of the ADB, tolda seminar hosted by an ADB-affiliated think tank.
Kuroda also said that while Japan's economic prospects were brightening, inflation was lacking momentum and justified maintaining the BOJ's massive monetary stimulus for some time.
Kuroda, speaking in the upper house of parliament, also said he felt the BOJ would be able to manage its exit smoothly, including reducing the size of its balance sheet.
Service-sector sentiment improved for the first time in six quarters and companies remained upbeat on their capital expenditure plans, the Bank of Japan's "tankan" survey showed, offering hope the economic recovery will gather momentum in coming months.
The Bank of Japan's quarterly tankan business sentiment survey will likely show the headline index for big manufacturers' sentiment improved by four points to plus 14 in March from plus 10 in December, the poll of 19 economists found.
But household spending remained soft and consumer inflation was flat when stripping away the effect of rising energy costs, underscoring the challenges the Bank of Japan faces in generating sustained price rises backed by steady wage growth.
Members dismissed the notion that the BOJ would have to raise its 10-year government bond yield target due to gains in bond yields overseas, and instead said it should focus solely on the domestic economy.
"While some improvements have been observed in economic and price developments, there is still a long way to go to achieve our price target," Kuroda said in a speech at a Reuters Newsmaker event.
While the US Fed plans more rate hikes later this year, it is the policy outcome of two other central banks that are more important and should be looked out for, says Bill Gross.
In a widely expected move, the BOJ maintained the 0.1 percent interest it charges on a portion of excess reserves that financial institutions park at the central bank.
Tokyo will propose an agenda for its dialogue with the US in coming days, which will include a wide range of issues such as how Japan can provide technical assistance for US railway projects and increase imports of US shale gas to Japan, according to government sources with knowledge of the matter.
Takehiro Sato and Takahide Kiuchi have been thorns in Kuroda's side since he launched his radical monetary experiment in 2013, consistently warning of the demerits of the BOJ's huge asset purchases and dissenting to many proposals to ramp up stimulus.