The Reuters Tankan, which tracks the Bank of Japan's closely-watched tankan quarterly survey, also found service-sector firms' sentiment edging up, a further sign of broadening recovery.
Kuroda embarked on an unprecedented burst of monetary stimulus since Prime Minister Shinzo Abe handpicked him a few months after he swept to power in December 2012, pledging to pull Japan out of nearly two decades of stagnation and deflation.
"What's important is for inflation to accelerate, which would give (the BOJ) quite some flexibility in guiding monetary policy," Ito, a Columbia University professor, told a seminar in Tokyo.
But new board member Goushi Kataoka dissented from the BOJ board's decision to maintain its interest rate targets, arguing that the BOJ should buy government bonds so that 15-year JGB yields would remain at less than 0.2 percent.
Bank of Japan Governor Haruhiko Kuroda is also likely to stress that the bank is nowhere near dialing back its massive stimulus programme, with inflation distant from its 2 percent target.
With inflation far below a 2 percent target, the BOJ rules out any near-term exit from Kuroda's legacy ultra-easy policy.
Companies surveyed by the Bank of Japan expect consumer prices to rise 0.7 percent a year from now, lower than their projection for a 0.8 percent increase three months ago.
Kuroda also defended the BOJ's 2 percent inflation target, considered by many analysts as too ambitious, saying the bank can help keep long-term currency moves stable by setting its price goal at a level equivalent to other central banks.
But new board member Goushi Kataoka dissented to the BOJ's decision to maintain its interest rate targets, saying current monetary policy was insufficient to push inflation up to 2 percent during fiscal 2019.
The monthly poll - which tracks the Bank of Japan's closely watched quarterly tankan - found the service-sector mood had its best reading in more than two years, adding to recent signs of recovery in private consumption.
"The Bank of Japan has already begun normalising policy since it shifted to yield curve control last year, and that's the direction the bank seems to heading," he told Reuters.
The Reuters' monthly poll - which tracks the Bank of Japan's closely watched quarterly tankan - found the service-sector mood fell but still remained at a relatively high level, underscoring the firmness in domestic demand which drove robust expansion in the second quarter.
Former BOJ Deputy Governor Kazumasa Iwata criticised the central bank's price forecasts as too optimistic and warned that even hitting 1 percent inflation could be challenging given a recent batch of weak price data.
The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index (PMI) fell to 52.2 in July on a seasonally adjusted basis from a final 52.4 in June.
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.
Sayuri Shirai, a former BOJ board member, said the central bank may temporarily accelerate purchases of Japanese government bonds (JGB) to contain rises in bond yield, but won't have to buy huge amounts to cap yields around its zero percent target.
At a rate review on July 19-20, the Bank of Japan is set to keep monetary policy steady and offer a more upbeat assessment of the economy than it did in June to say it is expanding moderately, said sources familiar with the central bank's thinking.
Companies surveyed by the Bank of Japan expect consumer prices to rise 0.8 percent a year from now, higher than their projection for a 0.7 percent increase three months ago.
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.