Kazuo Ueda: Japan's economy and monetary policy

Speech by Mr Kazuo Ueda, Governor of the Bank of Japan, at a meeting with business leaders, Osaka, 3 October 2025.

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. When I visited this region last year, I had the opportunity to tour the construction site of Expo 2025 Osaka, Kansai. Since then, I have wished for the Expo's success, and since its opening this April, I have been delighted to see it thriving every day, welcoming over 22 million general visitors from Japan and abroad. I would like to express my sincere respect to everyone whose efforts made this possible.

Today, I look forward to hearing your candid opinions, which will be useful in the Bank's policy decisions and business operations. Before hearing from you, I would like to talk about developments in Japan's economic activity and prices and explain the Bank's thinking on the conduct of monetary policy.

I. Economic Activity and Prices

Current Situation of and Outlook for Economic Activity

I would like to begin by discussing the current situation of and outlook for economic activity in Japan. The Bank assesses that Japan's economy has recovered moderately, although some weakness has been seen in part.

Please take a look at Chart 1, which shows developments in the corporate sector. The results of the Bank's Tankan (Short-Term Economic Survey of Enterprises in Japan) released two days ago show that business sentiment has improved in some manufacturing industries, reflecting firms' view that the agreement in the Japan-U.S. tariff negotiations has reduced uncertainty in the outlook. The results also show that business sentiment has been at a favorable level on the whole. Turning to Chart 2, while corporate profits in manufacturing have been affected by factors such as a deterioration in export profitability reflecting U.S. tariff policies, profits on the whole have remained at high levels, at around the historical peak. Looking at profit projections for this fiscal year in the table on the right, profits of firms in manufacturing are now expected to fall by 8.6 percent, which is around the same level as in the previous survey in June. However, in nonmanufacturing, where the impact of U.S. tariff policies is relatively limited, profit projections remain more or less unchanged from the actual profits of the previous year, and overall, corporate profits are expected to remain at a relatively high level.