Asahi Noguchi: Economic activity, prices, and monetary policy in Japan
Speech by Mr Asahi Noguchi, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Oita, 27 November 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. Economic Developments at Home and Abroad
Please allow me first to express my deepest sympathy for the loss of life in the large-scale fire that occurred in Saganoseki, Oita City and to offer my sincere condolences to all those affected.
I will begin my speech by talking about recent economic developments at home and abroad. It can be said that Japan's economy is currently in a transitional period, where the economy is shifting from a deflationary or zero-inflation economy that lasted for several decades from the collapse of the bubble economy in the early 1990s until the onset of the COVID-19 pandemic, to an economy that grows while both prices and wages continue to rise. In this context, new developments that have not been seen before are starting to emerge in the economy, such as progress in wage hikes on the back of labor shortages owing to an expansion in employment, rising stock prices based on an increase in corporate profits, and growth in new businesses fueled by diversified business opportunities. On the other hand, high prices stemming from cost-push factors that emerged with the end of the pandemic have placed a heavy burden on households, thereby pushing down private consumption. Therefore, for Japan's economy to genuinely return to a growth path, it is essential that people's wages and income continue to grow in a way that exceeds price increases.