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

Speech by Mr Toyoaki Nakamura, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Fukuoka, 25 August 2022.

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

I. Economic and Price Developments at Home and Abroad

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 some weakness seen in part (Chart 1). The U.S. and European economies continue to recover, particularly for services consumption, although some weakness has been seen in several sectors. The Chinese economy has started to pick up, led mainly by exports and production, with the impact of lockdowns and other public health measures waning. Emerging and commodity-exporting economies other than China have generally picked up with the resumption of economic activity becoming full-fledged.

Against this background, Japan's economy has also picked up with the impact of the novel coronavirus (COVID-19) waning, despite being affected by factors such as rises in the price of commodities, including grain. In the corporate sector, exports have increased as a trend, although they have been under strong downward pressure due to supply-side constraints. Business fixed investment has picked up, albeit with effects of supply-side constraints. In the household sector, private consumption has increased moderately, particularly for services consumption, with the impact of COVID-19 waning and also with support from the materialization of pent-up demand. Meanwhile, the consumer price index (CPI) for all items less fresh food, or core CPI, has increased to 2.4 percent on a year-on-year basis, mainly due to rises in energy and food prices (Chart 2).