Toyoaki Nakamura: Economic activity, prices, and monetary policy in Japan

Speech (via webcast) by Mr Toyoaki Nakamura, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Yamanashi, 9 February 2022.

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

A. Recent Developments and Outlook for Economic Activity and Prices

I will begin my speech by talking about recent developments in economic activity and prices.

Overseas economies have recovered on the whole, albeit with variation across countries and regions, with the impact of the novel coronavirus (COVID-19) waning gradually (Chart 1). In advanced economies, resumption of economic activity continues as vaccination has progressed, while priority public health measures have been taken to respond specifically to the spread of the Omicron variant. Emerging and commodity-exporting economies have generally picked up on the back of progress with vaccinations.

Against this background, a pick-up in Japan's economy has become evident (Chart 2). Exports and production continue on an uptrend, albeit with the effects of supply-side constraints. A pick-up in private consumption has also become evident since early autumn 2021, although downward pressure due to the spread of the Omicron variant has recently been a cause for concern. On the price front, the year-on-year rate of change in the consumer price index (CPI) for all items less fresh food, or core CPI, despite being affected by the reduction in mobile phone charges, has been slightly positive, reflecting price rises in energy and other items (Chart 3).