Hitoshi Suzuki: Economic activity, prices and monetary policy in Japan

Speech by Mr Hitoshi Suzuki, Member of the Policy Board of the Bank of Japan, at a virtual Meeting with Business Leaders, Asahikawa, 27 August 2020.

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

I. Recent Economic and Price Developments

A. Developments in Overseas Economies

I would like to begin my speech by talking about overseas economies.

Overseas economies have been depressed significantly, reflecting the novel coronavirus (COVID-19) pandemic. As the impact of COVID-19 wanes, they are likely to recover, partly supported by aggressive macroeconomic policies taken by each country and region. Nevertheless, the pace of recovery is expected to be only moderate, since firms and households are likely to remain vigilant against the risk of infection until effective medicines and vaccines are developed (Chart 1).

Let me take a look at developments by major region. The U.S. economy has seen a continued pick-up mainly in its labor market indicators, reflecting moves to resume economic activity despite the ongoing spread of COVID-19. However, it is of concern whether the pace of economic recovery will be sustained, given the resurgence of COVID-19 and anxieties about the political and social situation.

In Europe, some signs of heading toward a pick-up have been observed, with indications of a resumption in economic activity, as seen in border restrictions starting to be relaxed within and from outside the European Union (EU). Yet, the economy remains significantly depressed. Along with an increasing number of confirmed COVID-19 cases, there have recently been moves to retighten preventive measures to contain the spread of the infection.