Naoki Tamura: Economic activity, prices and monetary policy in Japan

Speech by Mr Naoki Tamura, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Fukushima, 25 June 2025.

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

I. Economic Activity and Prices

A. Current Situation of and Outlook for Economic Activity and Prices

I will begin my speech by talking about developments in economic activity and prices in Japan. Simply put, my current assessment of these developments can be summarized into three points.

First, until March 2025, Japan's underlying inflation, measured by the consumer price index (CPI), had been on track toward achieving the price stability target of 2 percent and had been rising at a slightly faster pace than expected. Therefore, it could be judged that the likelihood of achieving the price stability target had increased further and the upward risks to prices had also grown further.

Second, regarding the U.S. tariff policy announced afterward, I assume that it will highly likely exert downward pressure on Japan's economic activity and prices. Nevertheless, the year-on-year rate of increase in the CPI is likely to continue rising at around 2 percent through fiscal 2027.