Seiji Adachi: Economic activity, prices, and monetary policy in Japan

Speech by Mr Seiji Adachi, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Sapporo, 2 June 2022.

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

First, I would like to touch on developments regarding COVID-19.

The global number of confirmed new cases seems to have stabilized somewhat (Chart 1). Meanwhile, many advanced countries have started to resume economic activity while living with COVID-19. Therefore, compared to the early stages of the outbreak, the economic impact of COVID-19 is likely to be on the wane.

These developments also hold true in Japan (Chart 1). The spread of the Omicron variant significantly restrained private consumption for the January-March quarter of 2022, but the COVID-19 situation has started to calm down since the start of April. The Economy Watchers Survey released by the Cabinet Office noted that the diffusion index (DI) for current economic conditions, especially for households, has been improving since March, when the number of Omicron cases passed its peak. In addition, the Japanese government is pursuing measures to find ways to live with COVID-19.

On the other hand, China's response has been a notable exception (Chart 1). The Chinese government is adhering to its zero-COVID policy; faced with a recent spike in the number of confirmed cases, it has been working to contain the spread of infection by carrying out city lockdowns.