Hajime Takata: Economic activity, prices and monetary policy in Japan
Speech by Mr Hajime Takata, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Kyoto, 26 February 2026.
The views expressed in this speech are those of the speaker and not the view of the BIS.
I. Economic Activity and Prices
I will begin with developments in economic activity and prices.
Overseas economies have grown moderately on the whole, although some weakness has been seen in part, reflecting trade and other policies in each jurisdiction. In the January 2026 World Economic Outlook (WEO) Update, the International Monetary Fund (IMF) revised upward its forecast for global growth from the April 2025 WEO, which had incorporated the significant impact of U.S. tariff policy, and from its subsequent October WEO (Chart 1). In addition, as shown in Chart 2, the upward revision in January 2026 has fully offset the downward revision in April 2025. Regarding the U.S. economy, despite initial concerns that domestic demand might decline due to the impact of reciprocal tariffs imposed in April 2025 by the Trump administration, the actual impact has been limited. Specifically, although there has been a slowdown in U.S. employment, corporate profits for IT-related firms in particular have improved. Amid anxiety about the future, deep-rooted concerns over consumption and investment remain but, buoyed by solid asset prices, consumption has been firm. In light of the slowdown in employment, the Federal Reserve cut its policy interest rate in September, October, and December 2025 (Chart 3). Meanwhile, wages and income have been robust, and AI investment has remained at a high level.