Haruhiko Kuroda: Japan's economy and monetary policy

Speech by Mr Kuroda Haruhiko, Governor of the Bank of Japan, at a meeting with business leaders, Osaka, 26 September 2022. 

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

Introduction

It is my great pleasure to have the opportunity today to exchange views with a distinguished gathering of business leaders in the Kansai region. I would like to take this chance to express my sincerest gratitude for your cooperation with the activities of the Bank of Japan's branches in Osaka, Kobe, and Kyoto.

The last two meetings with business leaders in the Kansai region were held online due to the novel coronavirus (COVID-19) pandemic. I am delighted to meet and exchange views with you in person for the first time in three years. At the outset, I will talk about developments in Japan's economic activity and prices and explain the Bank's thinking on the conduct of monetary policy.

I. Economic Developments

Let me start by talking about Japan's economic developments.

The repeated waves of COVID-19 at home and abroad have affected Japan's economy through various channels. In the first half of the year, COVID-19 cases surged in China -- which strictly adheres to the so-called zero-COVID policy -- and major cities such as Shanghai went into lockdowns. In the manufacturing industry -- such as automobiles and machine tools, where Japan has a competitive advantage -- firms faced parts procurement difficulties and had to reduce production. Thereafter, the supply-side constraints caused by the lockdown in Shanghai have been dissipating due to the lifting of such restrictions. While parts shortages have remained for some goods, Japan's exports and production overall have continued to increase as a trend, with the effects of supply-side constraints waning (Chart 1).