Shinichi Uchida: Japan's economy and monetary policy

Speech by Mr Shinichi Uchida, Deputy Governor of the Bank of Japan, at a meeting with local leaders, Shizuoka, 5 March 2025. 

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

Central bank speech  | 
05 March 2025
by Shinichi Uchida
PDF full text
(838kb)
  |  28 pages

Introduction

It is my pleasure to have the opportunity today to exchange views with leaders in administrative, economic, and financial areas in Shizuoka Prefecture. I would like to take this chance to express my sincere gratitude for your cooperation with the activities of the Bank of Japan's Shizuoka Branch. Before hearing from you, I will explain Japan's economic activity and prices, as well as the Bank's conduct of monetary policy. 

I. Developments in Economic Activity and Prices

Current Situation of Economic Activity and Prices

I will start by talking about developments in economic activity and prices. Please take a look at Chart 1. Japan's economy has recovered moderately, although some weakness has been seen in part. It is expected to keep growing at a pace above its potential growth rate. Let me move on to Chart 2. Corporate profits have been on an improving trend. In this situation, business fixed investment plans in the December 2024 Tankan (Short-Term Economic Survey of Enterprises in Japan) indicate that the year-on-year rate of increase in planned investment for fiscal 2024 is over 10 percent. Although some projects had to be postponed due to labor shortages in construction, this means that the increase in business fixed investment is likely to continue for an extended period.

Turning to Chart 3, private consumption has been on a moderate increasing trend. This is attributable to an accelerated rate of increase in employee income on the back of base pay hikes and a rise in bonuses. Anecdotal information, various surveys, and other sources collected so far suggest that, in the annual spring labor-management wage negotiations currently in process, wages are likely to continue rising steadily, following last year's solid wage increases. This is also expected to support private consumption.