Ueda Kazuo: Basic thinking on monetary policy and the outlook for economic activity and prices

Speech by Mr Ueda Kazuo, Governor of the Bank of Japan, at a meeting held by the Naigai Josei Chosa Kai (Research Institute of Japan), Tokyo, 19 May 2023.

Central bank speech  | 
23 May 2023
PDF full text
 |  22 pages


It is my great pleasure to have the opportunity to address you today at the Naigai Josei Chosa Kai.

This is my first speech since assuming office as Governor of the Bank of Japan. As I fulfill my duties as governor over the next five years, one of the things I will endeavor to do is to make logical decisions and provide explanations as clearly as possible. Monetary policy exerts its intended effects by working on financial markets and people's behavior at large. Therefore, it is important for the Bank to gain the public's understanding of the thinking underlying the Bank's policy conduct and the background to its policy decisions. Since the economy is driven by a complex interplay of a variety of factors and monetary policy involves specialized and technical aspects, I will try to provide clear and detailed explanations, unraveling the complexities one by one.

I have been an economist for nearly 50 years. Academics focus on a particular aspect of what is actually happening and construct theories designed for that aspect. In contrast, central bank policymakers are confronted with the actual complexities of the economy and need to make timely and appropriate decisions, so the perspectives of the two groups naturally differ. However, economic theory provides a useful perspective for understanding economic phenomena, and conversely, insights gained from the policy field can lead to the development of new theories. Economic theory and policy practice evolve in a closely interrelated manner, and I am committed to implementing the practice of monetary policy responsibly, while keeping the theoretical basis in mind.