Naoki Tamura: Economic activity, prices and monetary policy in Japan
Central bank: boj | Type: speech | Date: 2025-02-06

Bank

of

Japan February

6,

2025

## Economic Activity, Prices, and Monetary Policy in JapanSpeech at a Meeting with Local Leaders in Nagano

## TAMURA NaokiMember of the Policy Board(English translation based on the Japanese original)

## I.

Economic Activity and Prices

## A.

Economic ActivityI

will

begin

my

speech

by

talking

about

economic

activity

in

Japan.

The

Bank

of

Japan assesses that the economy has recovered moderately on the whole, although some weakness has been seen in part.

In terms of the median of the Policy Board members' forecasts -- as presented in the January 2025 Outlook for Economic Activity and Prices (Outlook Report) -Japan's real GDP growth rate is expected to be at 0.5 percent for fiscal 2024, 1.1 percent for fiscal 2025, and 1.0 percent for fiscal 2026 (Chart 1).

While the projected growth rate for fiscal 2024 is low, this reflects the impact of negative growth in the January-March quarter of

2024,

which

was

due

to

temporary

factors

such

as

a

suspension

of

production

and shipments at some automakers.

Looking at the growth rates for fiscal 2024 on a quarter-onquarter basis suggests that Japan's economy is likely to grow firmly.

Thereafter, the economy is

projected

to

keep

growing

at

a

pace

above

its

potential

growth

rate,

with

overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies.Chart 1: The Bank's Forecasts for Real GDPNote: Forecasts are medians of the Policy Board members' forecasts in the January 2025 Outlook Report.

Real GDP values for fiscal 2024 onward are calculated by multiplying the actual figure for fiscal 2023 by all successive projected growth rates for each year.Sources: Cabinet Office; Bank of Japan.Let

me

now

explain

wage

developments,

which

I

believe

warrant

particular

attention

in envisioning

the

economic

situation.

The

upcoming

results

of

the

annual

spring

labormanagement wage negotiations currently in process will be an important factor in assessing whether

the

virtuous

cycle

from

income

to

spending

will

continue

to

operate

(Chart

2).

Although the negotiations are still in progress, various large firms have already reported that they will implement high wage hikes on par with those last year.

There continue to be reports by some small and medium-sized firms that wage hikes will be difficult, but many other firms have voiced that they have no choice but to raise wages in response to labor shortages.

In this context, a paradigm shift seems to be taking place in firms' wage-setting behavior.

Previously, it was common for firms to generate profits and then return them to employees in the form of wage hikes.

Currently, however, firms face a situation of having to set a wage level that is sufficient to secure their workforce (Chart 3).

Just as firms have needed to reconsider their business strategies in the face of a rise in raw material prices while taking this situation as a given, they need to do the same thing while taking the current wage situation as a given.

Specifically, firms should take steps such as passing on cost increases to prices, enhancing business efficiency, and transforming their business models through, for example, business realignment and corporate restructuring.

I hear that corporate executives have formulated their medium-term management plans while factoring in annual wage hikes.

This suggests aChart 2: Results of the Annual Spring Labor-Management Wage NegotiationsNotes: 1.

Figures for "CPI inflation" are for all items less fresh food, excluding the effects of the consumption tax hikes.2.

Figures for "actual base pay increase" and "actual regular wage increase" from 1991 to 2014 are those published by the Central Labour Relations Commission, while those from 2015 to 2024 are figures released by the Japanese Trade Union Confederation (Rengo).

Figures are based on the wage negotiation results of labor unions for which the base pay increase is clear.Sources: Central Labour Relations Commission; Ministry of Internal Affairs and Communications; Rengo.Chart 3: Factors regarding Wage Hikes by FirmsNotes: 1.

In the left panel, figures are based on the LOBO survey by the Japan Chamber of Commerce and Industry, and show trends in raising scheduled cash earnings.

Figures up through fiscal 2023 are as of December of each fiscal year, while those for fiscal 2024 are as of September.2.

In the right panel, figures are based on a follow-up survey on the Price Negotiation Promotion Month organized by the Small and Medium Enterprise Agency.

The pass-through rate in the panel refers to the proportion of labor cost increases incurred during six months prior to each survey, and passed on to prices.Sources: Japan Chamber of Commerce and Industry; Small and Medium Enterprise Agency.fundamental shift in the long-standing assumption that wages will not increase.

In light of these points, I believe solid wage growth that is consistent with the price stability target of 2 percent can be expected at this year's annual spring labor-management wage negotiations.

## B.

Price DevelopmentsTurning to Japan's price developments, the year-on-year rate of increase in the consumer price index (CPI) for all items excluding fresh food has been at around 3 percent recently (Chart 4).

That for all items excluding fresh food and energy, for which prices fluctuate significantly, has been at around 2.5 percent.

The seasonally adjusted month-on-month rate of increase in this CPI has clearly accelerated since June 2024, roughly maintaining an increase of around 3 percent on an annualized basis (Chart 5).

This reflects several developments: (1) the priceChart 4: Consumer PricesSource: Ministry of Internal Affairs and Communications.Chart 5: Consumer Prices (Annualized Month-on-Month Rate of Change)Note: Figures are the CPI for all items less fresh food and energy.

Source: Ministry of Internal Affairs and Communications.pass-through of recent cost increases, including higher raw material prices, shipping costs, and utility costs; (2) the ongoing pass-through carried out with a time lag by industries and firms that have been unable to pass on past cost increases sufficiently; (3) a growing number of firms passing on higher personnel expenses to prices; and, in this situation, (4) a rise in rice prices that is further pushing up overall inflation.The inflation rate has remained at or above 2 percent for nearly three years, and the price of rice, which is a staple for Japanese people, has risen significantly.

I am concerned that these factors may have a greater negative impact on consumer sentiment than what the figures alone imply and may adversely affect private consumption.I think one reason why inflation has continued in Japan is that prices have been under upward pressure due to the positive output gap -- that is, the situation in which demand has outstripped potential supply capacity.

According to the Bank's estimate, the output gap has been at around 0 percent recently, although this rate needs to be viewed with latitude, as estimates may differ depending on the estimation methods and are subject to estimation errors (Chart 6).

So, does this mean that there has been neither upward nor downward pressure on prices?

Looking at the breakdown of the output gap, the labor input gap has been positive (i.e., labor shortage),

## Chart 6: Output GapNotes: 1.

Figures for the output gap are Bank staff estimates.2.

The Tankan factor utilization index is calculated as the weighted average of the production capacity DI and the employment conditions DI for all industries and enterprises.

Capital and labor shares are used as weights.

There is a discontinuity in the data for December 2003 due to a change in the survey framework.Source: Bank of Japan.whereas the capital input gap has been negative (i.e., excessive production capacity) because production facilities have not been operating at full capacity.

That said, such operation below full capacity is not necessarily due to a lack of demand but rather due largely to the shortage of

labor

needed

to

operate

facilities

sufficiently. 1 In

the Tankan (Short-Term

Economic Survey of Enterprises in Japan), recent developments in the diffusion indices (DIs) showing firms' perceptions of production capacity and employment conditions reveal that, while the share of firms responding

that their labor capacity has been

insufficient increased substantially, hardly any firms were experiencing excessive production capacity.

This may explain

the

significant

divergence

between

developments

in

the

weighted

average

of

the relevant DIs -- i.e., the Tankan factor utilization index -- and developments in the output gap estimated by the Bank. 2 Therefore, my view is that, although the tightness of supply and demand conditions differs between industries, the output gap is already in positive territory in reality and the lack of supply capacity is exerting upward pressure on prices.1

Anecdotal information includes the following.

The accommodations industry noted that Japanesestyle inns and western-style hotels inevitably had to limit occupancy rates due to labor shortages.

The taxi industry noted that a shortage of drivers made it impossible to operate all vehicles even if they were

available.

The

manufacturing

industry

noted

that

firms

were

unable

to

operate

production facilities at full capacity due to labor shortages.2 The Tankan factor utilization index is a composite indicator calculated using the weighted average of the production capacity DI and the employment conditions DI in the Tankan .

It indicates whether firms sense an excess or a shortage in their production and labor capacity.I

would

also

like

to

touch

on

medium-

to

long-term

inflation

expectations

of

firms

and households,

which

are

an

important

factor

in

assessing

the

underlying

trend

of

inflation.

Firms' inflation outlook for general prices in the Tankan has increased moderately and that for five years ahead has continued to be above 2 percent (Chart 7).

The results of the Bank's Opinion Survey on the General Public's Views and Behavior show that households' inflation outlook for five years ahead has been significantly above 2 percent, although bias in expected price levels should be taken into account. 3 Considering these factors, I believe that inflation expectations of firms and households have risen steadily and have generally reached the 2 percent level.Chart 7: Inflation ExpectationsNotes: 1.

Figures for firms in the left panel are averages of all industries and enterprises.2.

Regarding figures for households in the middle panel, figures for the quantitative question are medians of numerical values for expected inflation rates provided by respondents.

Figures for the qualitative question are estimated using the modified Carlson-Parkin method, quantifying the results of the 5-choice question shown in the right panel, asking respondents their expectations for whether and to what degree prices will go up or down.Source: Bank of Japan.3

This survey included a qualitative question asking respondents to indicate their outlook for prices by choosing options such as prices "will go up slightly" or "will go up significantly." When inflation expectations

are

estimated

using

the

responses

to

this

question

to

adjust

for

bias

in

household expectations, the estimates suggest that inflation expectations have risen moderately but are still at a level

of

around

1.5

percent.

It

should

be

noted,

however,

that

even

if

people

with

high

inflation expectations,

like

respondents

saying

that

prices

"will

go

up

significantly,"

have

increased

their expectations further, they are only able to choose the same response.

Given the bias arising from such constraints, the possibility cannot be ruled out that inflation expectations may be underestimated in these cases.Returning to consumer prices, let us take a look at the outlook.

In terms of the median of the Policy Board members' forecasts, the CPI (all items less fresh food) is projected to see a yearon-year rate of increase of 2.7 percent for fiscal 2024, 2.4 percent for fiscal 2025, and 2.0 percent for fiscal 2026 (Chart 8).

As price developments have been on track to achieve the price

stability

target,

the

Bank

assesses

that

the

likelihood

of

realizing

this

target

has continued to rise.

Moreover, considering the recent progress in firms' pass-through of cost increases to prices, higher personnel expenses reflecting labor shortages, and firms' moves to pass on such expenses to prices, I believe that risks to prices are becoming more skewed to the upside.Chart 8: The Bank's Forecasts for the CPINotes: 1.

Figures are the CPI for all items less fresh food, excluding the effects of the consumption tax hikes.2.

The locations of , △ , and ▼ in the chart indicate the figures for each Policy Board member's forecasts.

The risk balance assessed by each Policy Board member is shown by the following shapes: indicates that a member assesses "upside and downside risks as being generally balanced," △ indicates that a member assesses "risks are skewed to the upside," and ▼ indicates that a member assesses "risks are skewed to the downside." The dotted red lines show the medians of the Policy Board members' forecasts presented in the January 2025 Outlook Report.Sources: Ministry of Internal Affairs and Communications; Bank of Japan.

## II.

Conduct of Monetary PolicyNow, I would like to turn to the Bank's conduct of monetary policy.

The Bank conducts monetary

policy

with

the

aim

of

achieving

the

price

stability

target

of

2

percent

in

a sustainable and stable manner.

Since the changes in the monetary policy framework made in March 2024, it has regarded guiding the short-term

interest

rate as

a primary policy

tool (Chart

9).

While

the

Bank

intends

to

adjust

the

degree

of

monetary

accommodation

in response to an increase in the likelihood of achieving the price stability target, it decided at the January 2025 Monetary Policy Meeting (MPM) to raise the target level of its short-term policy interest rate by 0.25 percentage points, to around 0.5 percent (Chart 10).Chart 9: Guideline for Market Operations|

| Short-term interest rate

| Other operating targets

||------------|---------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|| Oct. 2010- | Around 0 to 0.1% (uncollateralized overnight call rate)

| -

|| Apr. 2013- | -

| Monetary base: annual pace of increase of about 60-70 trillion yen || Oct. 2014- | -

| Monetary base: annual pace of increase of about 80 trillion yen

||

| Yield curve control

| Yield curve control

|| Sep. 2016- | -0.1% (rate on the Policy-Rate Balances in current accounts held by financial institutions at the Bank) | 10-year JGB yields: around 0%

|| Mar. 2024- | Around 0 to 0.1% (uncollateralized overnight call rate)

| -

|| Jul. 2024- | Around 0.25% (uncollateralized overnight call rate)

| -

|| Jan. 2025- | Around 0.5% (uncollateralized overnight call rate)

| -

|Chart 10: Decision at the January 2025 MPMJapan's economic activity and prices have been developing generally in line with the Bank's outlook , and the likelihood of realizing the outlook has been rising .|

| Fiscal 2024

| Fiscal 2025

| Fiscal 2026

||--------------------------------------------|---------------|---------------|---------------|| Real GDP

| 0.5 (-0.1)

| 1.1 (-)

| 1.0 (-)

|| CPI (all items less fresh food)

| 2.7 (+0.2)

| 2.4 (+0.5)

| 2.0 (+0.1)

|| CPI (all items less fresh food and energy) | 2.2 (+0.2)

| 2.1 (+0.2)

| 2.1 (-)

|Adjusting the degree of monetary accommodation from the perspective of sustainable and stable achievement of the price stability target of 2 percent

## Short-term interest rate raised to "around 0.5%" :(uncollateralized overnight call rate)(previously "around 0.25%")-  Real interest rates are expected to remain significantly negative, and accommodative financial conditions will continue to firmly support economic activity .-  If the outlook presented in the January Outlook Report will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation.The Bank expects that underlying CPI inflation will increase gradually and that, in the second half of the projection period presented in the January Outlook Report -- which covers the period through fiscal 2026 -- it will be at a level that is generally consistent with the price stability target.

Moreover, although there are various uncertainties regarding the outlook, I believe that, by the second half of fiscal 2025 -- when wage hikes resulting from annual wage negotiations,

including

among small and medium-sized firms, will likely be confirmed -Japan's economy will reach a point where it can be judged that the price stability target has been achieved, considering several positive factors: changes in firms' wage- and price-setting behavior; the lack of supply capacity, reflecting labor shortages; and firms' and households' inflation expectations, which have generally reached 2 percent.

If the economy does reach this point, it will be necessary for the Bank to raise the short-term policy interest rate to a level that is neutral to economic activity and prices -- i.e., the nominal neutral interest rate -within

a

similar

timeframe.

The

reason

is

that,

with

upside

risks

to

prices

growing

as

I mentioned earlier, if the short-term interest rate stays below the level of the neutral interest rate, this will further push up inflation.

My sense is that the neutral interest rate would be at least around 1 percent.

Therefore, I think it is necessary for the Bank to raise the short-terminterest rate to at least that level by the second half of fiscal 2025 to contain the upside risks to prices and achieve the price stability target in a sustainable and stable manner.However,

how

economic

agents

in

Japan,

which

has

long

experienced

a

state

without meaningful

interest

rates,

react

to

higher

interest

rates

is

an

issue

that

warrants

careful attention without any preconceptions.

Thus, bearing in mind that the short-term interest rate should be at the 1 percent level by the second half of fiscal 2025, I think the Bank needs to raise this rate in a timely and gradual manner, in response to the increase in the likelihood of achieving the price stability target.

While doing so, it also needs to determine the appropriate level

of

the

short-term

interest

rate

by

carefully

assessing

how

the

economy

and

prices respond to the rate hikes.

Based on these considerations, I will assess the appropriate timing of the next policy rate hike, to 0.75 percent.

I believe that, even if the policy rate were raised to 0.75 percent, real interest rates would remain significantly negative and there would still be a long way to go before reaching a level that would put downward pressure on economic activity.

Put differently, now is the time for the Bank to ease off slightly from pressing hard on

the

accelerator

of

monetary

easing,

so

that

it

can

slow

down

when

necessary

while avoiding harsh braking.

## III.

Review of Monetary Policy from a Broad PerspectiveAt the December 2024 MPM, the Bank completed the review of monetary policy from a broad perspective (the Review), which it had been conducting since April 2023, and then released a report.

In the Review, the Bank examined the positive effects and side effects of unconventional

monetary

policy

and

laid

out

the

implications

for

the

future

conduct

of monetary policy, considering the developments in Japan's economic activity and prices as well as financial conditions over the past 25 years.

Today, I would like to share what I consider to be the key points of the Review and my thoughts about some of these points.

## A.

Positive Effects and Side Effects of Large-Scale Monetary Easing since 2013I will start with the positive effects and side effects of the various unconventional monetary policy

measures

the

Bank

implemented

from

2013

(Chart

11).

The

Review

draws

two conclusions: (1) while not as much as originally expected, large-scale monetary easing pushed up economic activity and prices; and (2) although there have been certain side effects, the overall effect of such easing on Japan's economy so far has been positive.

I would like to make a few comments on these points, drawing on my past experience as a banker in the private sector.

## Chart 11: Positive Effects and Side Effects of Large-Scale Monetary Easing since 2013

## Impact on Economic Activity and Prices- Large-scale monetary easing pushed up economic activity and prices .- However, mainly due to the difficulties of influencing expectations, the effect was not as large as expected at the time when it was introduced .

## Side Effects of Large-Scale Monetary Easing etc.| Functioning of financial markets

| Negative impact on the functioning of the JGB market

||-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|| Functioning of financial intermediation | Downward pressure on financial institutions' interest margins on loans and other assets but no evidence of financial intermediation activities being impeded || Supply side of the economy

| No clear conclusion reached, either positive or negative

|

## Assessment of the Effects and Side Effects of Large-Scale Monetary Easing- Although there have been certain side effects on financial markets and financial institutions' profits, the overall effect on the Japanese economy so far appears to have been positive .- However, attention should be paid to the possibility that the negative effects may become larger in the future , such as the possibility that the functioning of the JGB market does not fully recover or possible side effects of large-scale monetary easing materialize at a later date.The first is about the side effects of large-scale monetary easing on the supply side of the economy.

Based on analyses of currently available data, no clear conclusions, either positive or negative, were reached in the Review regarding the impact on the supply side.

However, I think it highly likely that such easing exerted significant side effects.

Specifically, due in part to

prolonged

large-scale

monetary

easing,

corporate

dynamism

stagnated,

resulting

in sluggish productivity.

Thus, in my view, it is a stretch to say that the overall effect of largescale monetary easing has been positive.The second point concerns the Review's call for attention to the possibility that the overall negative effects of large-scale monetary easing may become larger in the future, as further side effects may materialize at a later date.

It is of course necessary to continue to carefully examine the side effects on the functioning of financial markets, financial intermediation, and the supply side of the economy.

Another topic of relevance is whether prolonged monetary easing will give rise to problems, including how the yen's excessive depreciation and the surge

in

housing

prices

in

metropolitan

areas

will

affect

economic

activity

and

people's livelihoods.

Close monitoring is warranted here.

## B.

Implications for the Future Conduct of Monetary PolicyThe Review notes the following (Chart 12).

Unconventional monetary policy measures were effective in pushing up Japan's economic activity and prices.

However, the quantitative degree of their effects is uncertain compared with guiding the short-term interest rate.

Moreover, when unconventional measures are implemented at a large scale for a long period of time, they can bring about side effects.

Going forward, if it becomes necessary to implement such measures, it will be important to weigh the benefits and costs, while taking account of the developments in economic activity and prices as well as financial conditions at the time.

## Chart 12: Implications for the Future Conduct of Monetary Policy (1)

## The Bank's Thinking on Unconventional Monetary Policy- Unconventional monetary policy measures were effective in pushing up Japan's economic activity and prices .

However, the quantitative degree of their effects is uncertain compared with conventional monetary policy measures (guiding short-term interest rates) .

When unconventional monetary policy measures are implemented at a large scale for a long period of time, they can bring about side effects .- Going forward, if it becomes necessary to implement unconventional monetary policy measures , it will be important to weigh the benefits and costs, while taking account of the developments in economic activity and prices as well as financial conditions at that point in time .- The Bank should not exclude at this point any specific measures when considering the future conduct of monetary policy.

Looking ahead, in considering the implementation of each measure, it will be necessary for the Bank to design policy measures that can exert positive effects while minimizing side effects as much as possible, taking account of the findings of the Review.In this regard, it should be noted that the Review did not sufficiently analyze the effects of individual policies, owing to the limitations of quantitative analysis.

In my opinion, largescale monetary easing had a positive effect on economic activity and prices for two years orso from 2013, by way of the repricing of assets, including in terms of foreign exchange rates, stock prices, and real estate.

However, I feel that the marginal effects of subsequent additional measures, such as further increases in Japanese government bond (JGB) purchases and the introduction of the negative interest rate policy, were considerably limited.

If the Bank faces the

need

to

consider

unconventional

monetary

policy

measures

in

the

future,

I

believe

it should deliberate carefully, taking these factors into account.

## C.

Price Stability Target of 2 PercentRegarding the price stability target of 2 percent, the Review concludes that it is appropriate for the Bank to continue to conduct monetary policy from the perspective of sustainable and stable achievement of the target (Chart 13).

It cites as reasons for this the need for some leeway to lower real interest rates in the case of an economic downturn, the upward bias in the CPI, and the fact that many central banks in major advanced economies have also set their inflation targets at 2 percent.

## Chart 13: Implications for the Future Conduct of Monetary Policy (2)

## Price Stability Target of 2 Percent- It is appropriate for the Bank to continue to conduct monetary policy from the perspective of sustainable and stable achievement of the price stability target of 2 percent .-  Unconventional monetary policy measures cannot fully substitute for short-term interest rate control, and it is desirable to conduct monetary policy so that the zero lower bound would not be reached.

It is important to maintain a moderate positive inflation rate in a stable manner so that real interest rates can be lowered in the case of an economic downturn .-  Bias in the CPI serves as supporting evidence.-  Many central banks in major advanced economies have set their inflation targets at 2 percent .-  When Japan was under the prolonged deflation, or in a low-inflation environment, prices of individual items became more rigid and the regular pay tended to be unchanged, and this may have distorted resource allocation or have constrained proactive investment by firms .- In conducting monetary policy, it is important not to focus on the inflation rate at each point in time, but rather to capture the underlying trend of inflation by analyzing a variety of factors affecting the price changes .In addition, the results of surveys for firms and households indicate that many preferred a situation in which both prices and wages (income) rise moderately to a situation in which they both remain almost unchanged (Chart 14).

When Japan was under prolonged deflation, or in a low-inflation environment, prices of many items became more rigid and the regular pay

tended

to

be

unchanged.

I

believe

that

such

a

situation

may

have

distorted

resource allocation or constrained proactive investment by firms.

Based on these experiences, it is necessary to achieve a moderate rise in prices accompanied by wage increases.Chart 14: Preferences regarding Prices, Income, and Wages Households FirmsNote: Figures for households are based on the Opinion Survey on the General Public's Views and Behavior (September 2024 Survey).

Those for firms are based on the Survey regarding Corporate Behavior since the Mid-1990s .

Source: Bank of Japan.On this basis, I think the Review underscores a vital point when it notes that, in conducting monetary policy, it is important not to focus on the inflation rate at each point in time, but rather to capture the underlying trend of inflation by analyzing a variety of factors affecting the price changes.

Rather than being particular about the numerical value of 2.0 percent, I believe that, as long as prices are increasing moderately, the Bank should examine whether the mechanism behind the increase is consistent with the price stability target.

## D.

Fiscal and Monetary PolicyAs the Bank has continuously and consistently explained about the relationship between fiscal and monetary policy, the aim of monetary policy is to achieve price stability and should not be to support monetary financing of government debt.

Nevertheless, in the exchange of viewsconducted as part of the Review, it was pointed out that the Bank's large-scale JGB purchases resulted in a loosening of fiscal discipline, even though monetary finance was not the purpose of

the

purchases.

The

government

and

the

Diet

are

responsible

for

conducting

fiscal management appropriately.

This is reflected in the joint statement released by the government and the Bank in 2013, which stated that the government would steadily promote measures aimed at establishing a sustainable fiscal structure.

I believe it important to steadily ensure market credibility of achieving medium- to long-term fiscal soundness.

That said, one side effect of the Bank's large-scale monetary easing was deterioration in the functioning of the JGB market, as it has become difficult to gauge how the market sees factors such as the future state of economic activity and prices as well as the government's fiscal condition by looking at the level of long-term yields on JGBs and how the level changes.

I think this point warrants attention.Up to now, I have highlighted and discussed monetary policy, which was the focus of the Review.

A

final

point

I

would

like

to

emphasize

is

that,

while

monetary

policy

has

a significant

impact

on

economic

activity

and

prices,

not

everything

can

be

accomplished through monetary policy.

The chief actors in an economy are economic agents such as firms and households.

I would thus like to reiterate that, even if monetary policy has supported the recent increases in prices and wages, I do not believe that these increases could have been achieved by monetary policy alone.Thank you.