Kazuo Ueda: Economic activity and prices, and monetary policy in Japan

Speech by Mr Kazuo Ueda, Governor of the Bank of Japan, at a meeting held by the Naigai Josei Chosa Kai (Research Institute of Japan), Tokyo, 3 June 2025.

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

Introduction

Thank you for the opportunity to speak today at the Naigai Josei Chosa Kai. It was two years ago at this event that I gave my first speech after becoming Governor of the Bank of Japan. In that speech, I stated that I would endeavor to make logical decisions and provide explanations as clearly as possible in fulfilling my duties as Governor. Moreover, with a view to carrying out the Bank's mandate of achieving price stability, I highlighted the importance of carefully supporting "nascent developments," which were finally in sight at that time, in maturing toward achieving the price stability target of 2 percent.

Fortunately, Japan's economic activity and prices have continued to improve since then, and the "nascent developments" toward achieving the 2 percent target have steadily gained momentum, accompanied by wage increases. In March 2024, the Bank judged it was within sight that the price stability target of 2 percent would be achieved in a sustainable and stable manner, and changed its large-scale monetary easing framework, which had lasted for over a decade. Thereafter, it adjusted the degree of monetary accommodation by raising the policy interest rate in July 2024 and again in January 2025.

However, the scale of the tariffs announced by the U.S. administration since early spring of this year was considerably larger than what many people had expected, and the environment surrounding economic activity and prices at home and abroad is changing significantly. While the environment surrounding Japan's economic activity and prices also has become increasingly complex, today I would like to return to what I stated as my intention when I spoke here two years ago and explain, as clearly as possible, the Bank's view on Japan's economic activity and prices and its thinking on the conduct of monetary policy.