Makoto Sakurai: Economic activity, prices, and monetary policy in Japan

Speech by Mr Makoto Sakurai, Member of the Policy Board of the Bank of Japan, at a meeting with business leaders, Gunma, 24 May 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I. Economic Activity at Home and Abroad: Recent Developments and the Outlook

A. Overseas Economies

Let me start with developments in overseas economies.

Overseas economies have continued to grow firmly on the whole. Trade activity was sluggish globally following the financial crisis of 2008, but it has been recovering markedly recently. Under these circumstances, as favorable effects spill over from advanced to emerging economies, the momentum toward recovery is spreading to broader regions. Global financial markets, which became somewhat unstable from February, have been regaining calmness of late.

Looking at developments in detail, the U.S. economy has been expanding. As exports have been on an increasing trend, business and household sentiment is improving as well. Expansionary fiscal measures taken by the U.S. government are also expected to push domestic demand upward in the short term. The European economy also has continued to recover firmly as a trend. Although several economic indicators have showed signs of a slowdown recently, this is considered to be due to temporary factors such as a reaction to the high growth that continued until the end of 2017, unfavorable weather conditions, and industrial strikes.