December 8, 2021
Bank of Japan
Japan's Economy and Monetary Policy
Speech at a Meeting with Local Leaders in Tokushima
AMAMIYA Masayoshi
Deputy Governor of the Bank of Japan
Introduction
It is my pleasure to have the opportunity today to exchange views with leaders in
administrative, financial, and economic areas in Tokushima Prefecture. I would like to take
this chance to express my sincere gratitude for your cooperation with the activities of the
Bank of Japan's Tokushima Office and Takamatsu Branch.
Since the outbreak of the novel coronavirus roughly two years ago, we have
(COVID-19),
had to exchange views online when holding meetings with local and business leaders across
Japan. Today, I am very grateful to visit here to meet with you at this gathering
face-to-face
and gain insights from your positive efforts toward boosting the local economy under the
severe pandemic.
COVID-19
At the outset of this meeting, I would like to explain the Bank's view on economic and price
developments, and also talk about its thinking on recent financial conditions surrounding
firms and on the conduct of monetary policy.
I. Economic Developments
Baseline Scenario
I will start by talking about economic developments.
It is still unclear how will affect domestic and overseas economies, partly due to
COVID-19
the emergence of a new variant named Omicron. As I will mention later, the outlook for the
global economy also is unclear because of various factors such as inflation. Since we are in
this highly uncertain situation, I would like to first explain the baseline scenario of the
outlook for Japan's economy and then elaborate on risk factors that could cause a deviation
from the scenario (Chart 1).
Looking at developments in Japan's economy, real GDP rose from the bottom hit for the
quarter of 2020 but has remained sluggish since the turn of this year. Most
April-June
recently, real GDP exhibited relatively large negative growth for the quarter.
July-September
One factor behind this is prolonged subdued private consumption, mainly of
face-to-face
services such as eating and drinking as well as accommodations, due to the spread of the
Delta variant this summer. Another factor is that exports and production, which had been
solid, became weak, mainly for automobile-related goods, due to delays in parts
procurement that reflect the spread of in Southeast Asia. In addition, such
COVID-19
constraints temporarily pushed down consumption of durable goods and
supply-side
business fixed investment, and this also contributed to negative GDP growth. That said, in
the Bank's baseline scenario, the recovery trend in Japan's economy is likely to gradually
become evident toward next year. This outlook is based on the following three points.
First, it is projected that the effects of constraints will be transitory and thus the
supply-side
virtuous cycle in the corporate sector will be maintained in Japan (Chart 2). Specifically, the
recent weak exports and production are caused by constraints such as parts
supply-side
shortages. On the back of continued strong recovery in overseas economies, particularly
advanced economies, Japanese firms are facing solid demand, mainly for
digital-related
goods. Therefore, as supply of parts resumes, exports and production are likely to increase
firmly again. In fact, the situation in Southeast Asia, which triggered the current
COVID-19
disruptions, has been on an improving trend, and factory production has been
supply-chain
resuming in the region. It is expected that a recovery in production to catch up with demand
and the restocking of inventories that had been reduced to a large degree will boost
production activity. In this situation, corporate profits, which already have recovered to the
level, are likely to increase further. Business fixed investment also is
pre-pandemic
projected to become active, partly due to firms' efforts toward digitalization and
decarbonization.
The second point is that private consumption finally has been picking up after a prolonged
severe phase (Chart 3). In Japan, the vaccination rate has risen to a level above that in the
United States and Europe and the number of confirmed cases has declined. Against this
background, public health measures, including the state of emergency and priority measures
to prevent the spread of disease, have been lifted since October. Timely data, such as the
Economy Watchers Survey and location data from mobile phones, show that private
consumption, including that of services such as eating and drinking as well as
face-to-face
accommodations, has been heading toward recovery since October. Meanwhile, employee
income has turned to an increase, reflecting a rise in the number of regular employees and
wage increases in industries with acute labor shortage. In addition, a considerable amount of
savings has accumulated in the overall household sector as a result of constrained
consumption activity during the pandemic. If people use their income and savings to
consume, for example, services they had cut back, a virtuous cycle will operate
face-to-face
in which such an increase in spending will bring about a sales increase at
firms and wage increases for those working there, and thereby
consumption-related
encourage a further increase in consumption.
The third point is the effects of the government's economic stimulus package formulated
last month. While the extent to which the package will push up the economy also depends
on the supplementary budget and thus should be closely examined, there will likely be the
synergy effects of monetary and fiscal policy mix. That is, the Bank has pursued powerful
monetary easing measures so that and interest rates will be stable at low
short- long-term
levels. In this situation, an expansion in fiscal spending is likely to have greater stimulus
effects without leading to a rise in interest rates. It is therefore expected that the latest
stimulus package will underpin the economy through the synergy effects.
Taking these points into account, it is projected as a baseline scenario that the recovery
trend in the overall economy will gradually become evident through next year, as downward
pressure stemming from constraints and wanes and the effects of the
supply-side COVID-19
economic stimulus package materialize.
Risk Factors
However, as I mentioned at the outset, the outlook for Japan's economy entails extremely
high uncertainties. The following risk factors warrant attention.
First, there remain uncertainties over whether services consumption will pick up steadily
during the era. As explained, consumption of services, such as
COVID-19 face-to-face
eating and drinking as well as accommodations, has been picking up. That said, anecdotal
information from firms suggests that vigilance against is sticky and thus people
COVID-19
are reluctant to hold large parties or go on a group trip. In some European
year-end
countries, the number of confirmed cases has resurged despite progress with vaccinations,
and cases of the new Omicron variant, which is considered to be highly contagious, have
been detected. Given persistent risk aversion of households in Japan, mainly of seniors, the
extent to which consumption will recover continues to warrant attention.
The second factor is a risk that the effects of supply-side constraints will be amplified or
prolonged (Chart 4). As mentioned earlier, the issue of parts shortages caused by the spread
of in Southeast Asia has started to dissipate. That said, there remains a
COVID-19
fundamental problem that firms' supply capacity has not been able to keep up with the surge
in demand, mainly for goods. In order to solve this problem, enhancing
digital-related
supply capacity through business fixed investment is essential, and this will likely take
some time. In particular, supply and demand conditions of semiconductors have been tighter
than ever because of the existing trend of acceleration in digitalization, as seen in the spread
of 5G networks and electrification of vehicles, and because of an expansion in online
demand due to the outbreak of the pandemic. Therefore, a possible recovery in production
might be hampered by shortages of parts such as semiconductors. Besides parts shortages,
various constraints have emerged on a global basis. These include stagnation of
supply-side
logistical services, such as shipping, and labor shortage in the United States, for example.
As the impact of wanes, the demand imbalance and bottlenecks on the
COVID-19
production and logistics sides are likely to essentially head toward a resolution. That said, it
is necessary to carefully examine the extent to which constraints will remain.
supply-side
The third factor concerns developments in overseas economies. Supported by aggressive
macroeconomic policies taken in advanced economies, overseas economies are likely to
continue recovering steadily on the whole, albeit with variation across countries and regions.
That said, relatively high inflation has continued in the United States and Europe for longer
than initially expected, and market participants are speculating that central banks in those
economies might reduce monetary accommodation earlier than expected. In the latest World
Economic Outlook, the International Monetary Fund (IMF) warns that "great uncertainty
surrounds inflation prospects." In addition to the debt problems in the real estate sector, the
Chinese economy entails a risk of a decline in to growth potential.
medium- long-term
These developments should be monitored, as they could affect global financial markets, for
example, and in turn weigh on overseas economies.
In addition, let me touch on the impact of a rise in commodity prices as a risk related to
overseas economies (Chart 5). Prices of a wide range of commodities, such as crude oil,
natural gas, and copper, have increased clearly of late. In the meantime, the depreciation of
the yen has also pushed up commodity prices in yen terms. Since Japan depends heavily on
imported resources, the rise in commodity prices in itself means an outflow of income to
countries. However, this is only one aspect of the impact of the rise in
resource-exporting
commodity prices. In order to examine the impact on Japan's economy as a whole, it is
important to also take into account the economic environment behind this rise. For example,
if the rise in commodity prices is due to an expansion in demand triggered by the recovery
in the global economy, firms engaging in global business will benefit from an increase in
exports and improvement in profits earned abroad. If these firms increase business fixed
investment and raise their employees' wages, this will also have a positive impact on Japan's
economy as a whole. On this point, various factors have been involved in the current rise in
commodity prices. Quantitative analysis by the Bank's staff shows that, although the rise is
partly due to supply factors, such as the reduction in oil production by
oil-producing
countries, it seems to be basically due to demand factors, such as the expansion in demand
for resources stemming from the recovery in the global economy.1 While this result needs
to be interpreted with considerable latitude, it is consistent with the forecasts made by
international organizations, including the IMF, that the global economy will grow well
above the average this year. It is therefore considered that the improving trend in
long-term
corporate profits will not be hampered for Japan's economy as a whole, mainly thanks to
firms in the manufacturing sector, which tend to receive greater benefit from the global
expansion in demand. That said, the effects of the expansion on corporate profits vary
across economic entities, depending on industry and firm size. For example, the negative
impact of an increase in import costs stemming from the rise in commodity prices is more
likely to be significant for nonmanufacturing or small and firms because
medium-sized
many of them are domestic The Bank will closely monitor whether or not
demand-oriented.
the current rise in commodity prices impedes the recovery trend in Japan's economy, mainly
through deterioration in profits of sectors that are adversely affected.
II. Price Developments
Next, let me talk about price developments (Chart 6).
Commodity prices have risen, as I just mentioned, and global supply and demand conditions
of goods have tightened. Against this background, the producer price index (PPI) in Japan --
which captures prices of goods traded within the domestic corporate sector reached 8
--
percent for October on a basis, the highest level since early 1981 in the
year-on-year
aftermath of the second oil shock. On the other hand, the rate of change in the
year-on-year
consumer price index (CPI) which captures domestic consumer prices of goods and
--
services for all items excluding fresh food has been at around 0 percent recently, despite
--
the rise in energy prices. This is notably low considering that the rate of
year-on-year
increase in consumer prices has been at around 6 percent in the United States and around 5
percent in Europe.
What lies behind the weak consumer prices in Japan are structural factors unique to the
country, in addition to the slower recovery in demand compared with the United States and
Europe, mainly for private consumption. Unlike firms in the United States and other
countries, Japanese firms continued to hoard their regular workers in particular even during
the pandemic, while making use of such programs as employment adjustment subsidies.
This suggests that they have the capacity to swiftly expand supply of products and services
in response to a recovery in demand. In addition, a mindset and behavior based on the
assumption that prices will not increase easily have remained deeply entrenched among
firms and households in Japan due to their experience of deflation in the past.
Nevertheless, the underlying inflationary pressure has been increasing in Japan, albeit
gradually (Chart 7). For instance, mobile phone charges alone have pushed down the rate of
change in the overall CPI by about 1.5 percentage points, mainly because major carriers
launched mobile phone plans this spring. When excluding such temporary factors,
low-cost
the rate of change in the CPI seems to be increasing moderately in positive territory.
Meanwhile, Japanese firms' stance is starting to change. Looking at firms'
price-setting
stance regarding input and output prices in the Tankan, there have been times in the past
when firms found it hard to raise output prices even when input prices rose. However, this
seems to have become less prevalent recently; that is, there has been an increasing number
of firms that are passing on the increase in input costs to output prices, including in overseas
markets where demand has been steady. While there has been an established practice among
firms in the basic materials industry, such as steel firms, to pass on a certain ratio of
increase in input costs to output prices, attention is needed on the extent to which this
practice will spread to other industries.
III. Financial Conditions surrounding Firms and the Bank's Conduct of Monetary
Policy
Financial Conditions
I would now like to explain the Bank's conduct of monetary policy (Chart 8).
Let me first describe Japan's financial conditions surrounding firms, the starting point of the
transmission channel of the effects of monetary policy. Immediately after the outbreak of
last year, precautionary demand for funds surged due to heightened
COVID-19
uncertainties over the future, and financial positions, mainly of firms, deteriorated
significantly due to a decline in sales. Financial markets at home and abroad also became
significantly unstable. In order to address this situation, the Bank has been supporting
financing, mainly of firms, and maintaining stability in financial markets by conducting
powerful monetary easing since March 2020 through the following three measures: (1) the
Special Program to Support Financing in Response to the Novel Coronavirus
(COVID-19);
(2) an ample and flexible provision of yen and foreign currency funds, mainly by
purchasing Japanese government bonds (JGBs) and conducting the U.S. dollar
operations; and (3) purchases of funds (ETFs) and Japan
funds-supplying exchange-traded
real estate investment trusts The Special Program consists of two temporary
(J-REITs).
measures to support financing, mainly of firms: an operation through which the Bank
provides funds on favorable terms to financial institutions that make loans in response to
and a substantial increase in purchases of CP and corporate bonds.
COVID-19
Owing to the Bank's responses, together with the government's measures to support
financing and financial institutions' efforts, firms' funding conditions have remained
accommodative on the whole (Chart 9). In the CP and corporate bond markets, which are
important sources of financing for large firms, issuance conditions have been extremely
favorable; for example, favorable issuance conditions for CP can be confirmed by the
relevant diffusion index (DI) in the Tankan. Since large firms in particular have been
repaying loans they borrowed after the outbreak of COVID-19 as a precaution against a
shortage of funds, the pace of increase in the amount outstanding of bank lending has
decelerated, indicating that corporate financing has become stable.
In contrast, while financial conditions surrounding small and firms seem to
medium-sized
be on an improving trend, some still face weakness in their financial positions (Chart 10). In
particular, small and firms in the services industry, which has
medium-sized face-to-face
been strongly affected by have been slower to improve their financing. Looking
COVID-19,
at the DI for financial positions of small and firms in the Tankan, while the
medium-sized
DI for all industries is positive, that for the services industry remains negative,
face-to-face
which means that the proportion of firms answering that financial positions are "tight" is
larger than those answering "easy." Under these circumstances, financial institutions'
lending attitudes have been accommodative as perceived by firms of all sizes. My
understanding is that private financial institutions have been supporting financing of their
corporate clients, mainly through lending operations, even after the new applications for
effectively and unsecured loans ended in March 2021.
so-called interest-free
In sum, financial conditions surrounding firms have improved on the whole, although
weakness in financial positions has remained for some small and firms in, for
medium-sized
example, the services industry. The Bank's Special Program is scheduled to be
face-to-face
conducted until the end of March 2022, and the responses thereafter will be appropriately
decided by examining developments in corporate financing and other factors based on, for
example, the upcoming December Tankan.
Conduct of Monetary Policy
On that basis, I will explain the Bank's view on the future conduct of monetary policy
(Chart 11).
Even though the underlying trend in inflation has gradually increased, as I mentioned earlier,
Japan's inflation rate is still far below the price stability target of 2 percent. The Bank
projects that the rate of increase in Japan's CPI will be only at around 1 percent even in
fiscal 2023, which is the end of the current projection period. It will therefore persistently
continue with powerful monetary easing under the current Quantitative and Qualitative
Monetary Easing (QQE) with Yield Curve Control to achieve the price stability target of 2
percent. I would also like to emphasize that there is no change to the Bank's stance that, for
the time being, it will closely monitor the impact of and not hesitate to take
COVID-19
additional easing measures if necessary.
When I say this, I am sometimes asked whether there is no need for Japan to adjust
monetary easing while central banks in the United States and Europe have recently started
to move toward adjusting theirs. Some central banks are facing a common problem that is
both old and new; namely, how to respond to price increases stemming from rising
commodity prices and constraints. Essentially, if price rises are temporary,
supply-side
central banks should allow them and continue with monetary easing to concentrate on
supporting the economy. On the other hand, if prices increase for a wide range of goods
other than energy as well as of services, or if there is concern about
so-called second-round
effects of price rises on wages and inflation expectations, central banks could reduce
monetary accommodation to contain such developments. In this regard, with inflation
remaining above the target, central banks in the United States and Europe face the difficult
choice of whether to maintain their current monetary easing and continue to support the
economic recovery, or whether to reduce monetary accommodation to limit
second-round
effects. Given the price developments in Japan I have described, I think it makes sense that
the Bank does not actually need to adjust its monetary easing at present. Central
large-scale
banks conduct monetary policies in line with developments in economic activities and
prices of their respective economies. It is therefore natural that the specifics of and
directions for their monetary policies are not the same, and this difference will instead
contribute to stability in their economies as well as the global economy.
IV. Current Situation of and Outlook for Tokushima Prefecture's Economy
Lastly, I would like to talk about the economy of Tokushima Prefecture.
The economy has picked up as the impact of wanes. That is, private
COVID-19
consumption has picked up and production also has increased. Although there are high
uncertainties, such as over the course of the economy is expected to continue to
COVID-19,
pick up.
As with other prefectures, Tokushima Prefecture is facing the following challenges in the
medium to long term: structural problems such as the declining and aging population, issues
highlighted by the pandemic, such as with regard to digitalization, and the need to make
efforts to achieve the Sustainable Development Goals (SDGs), which have received
growing attention worldwide. While prefectures across the nation have been working
toward addressing these challenges in order to achieve sustainable development of their
economy, Tokushima Prefecture has taken various initiatives ahead of others and gained
attention both in Japan and abroad as an advanced model.
For example, I have heard that firms attracted by one of the best optical
IT-related --
broadband environments in Japan are opening satellite offices throughout the prefecture.
--
In addition, Kamikatsu Town, famous for its business, became the first
leaf-selling
municipality in Japan to declare a "zero waste" policy 18 years ago in 2003, and is still
drawing attention as a town where people can learn about environmental issues.
In addition, the prefecture is one of the world's most advanced LED regions, with more than
150 firms related to LEDs, which contribute greatly to energy and power savings. Firms and
universities are working together to promote industries, create new industries,
LED-based
and develop human resources. In terms of gender equality, Tokushima Prefecture has one of
the highest proportions of women working as business executives, in management positions,
or on councils of local governments, suggesting that women are playing a prominent role in
the region.
Looking back at the history of the prefecture's economy, the indigo and salt manufacturing
industries flourished by taking advantage of the climate and nature. These industries have
developed over time, and agriculture still flourishes in the areas where indigo was cultivated.
The raw material processing technology used in salt production is one of the roots of the
chemical industry, which has become a major industry of the prefecture's economy. Thus,
Tokushima Prefecture has a history of achieving sustainable development by reinventing
itself to meet the changing needs of the times. It is my hope that its economy will continue
to develop further by promoting initiatives that are ahead of their time.
The Bank, through its Tokushima Office and Takamatsu Branch, will continue to gather
information and exchange views in order to contribute in any way possible to various efforts
to revitalize the region. Thank you very much for your attention.
Japan's Economy and Monetary Policy
Speech at a Meeting with Local Leaders in Tokushima
December 8, 2021
AMAMIYA Masayoshi
Deputy Governor of the Bank of Japan
Introduction
I. Economic Developments
II. Price Developments
III. Financial Conditions surrounding Firms and
the Bank's Conduct of Monetary Policy
IV.Current Situation of and Outlook for
Tokushima Prefecture's Economy
Real GDP
ann., q/q % chg.
20/Q4 +11.8
s.a., ann., tril. yen
570
21/Q1 -4.1
560
Q2 +1.5
550
Q3 -3.0
540
530
520
510
500
490
15 16 17 18 19 20 21
CY
Note: Figures are based on the first preliminary estimates for the July - September quarter of 2021.
Source: Cabinet Office.
1
Chart 2
I. Economic Developments
Corporate Sector
Exports and Production Corporate Profits
s.a., CY 2015 = 100 s.a., tril. yen
120 25
110
20
100
15
19/Q4
90
10
80
Real exports
Current profits
5
70 Industrial production
0
60
CY 06 08 10 12 14 16 18 20 CY 06 08 10 12 14 16 18 20
Note: In the right-hand chart, figures are based on the Financial Statements Statistics of Corporations by Industry, Quarterly and exclude "finance and insurance." Figures from
2009/Q2 onward exclude pure holding companies.
Sources: Ministry of Finance; Ministry of Economy, Trade and Industry; Bank of Japan.
Household Sector
Confidence Indicator
Mobility Trends Based on Location Data
(Economy Watchers Survey)
current conditons DI (level), s.a. change from baseline, 7-day central moving average, %
60 10
5
50
0
40
-5
-10
30
-15
20
-20
Food and
-25
10
beverage
Services
-30
0
-35
Household
activity-related
-10
-40
Jan. Jan. Jan. Oct.
Jan. Apr. July Jul. Oct. Jan. Apr. Jul. Oct.
July
21
19 20 21 20
Note: In the right-hand chart, the baseline is the median on the corresponding day of the week during the 5-week period from January 3 to February 6, 2020. Figures are mobility trends for
places such as restaurants, shopping centers, and theme parks.
Sources: Cabinet Office; Google LLC https://www.google.com/covid19/mobility/. Accessed: December 1, 2021.
"Google COVID-19 Community Mobility Reports."
3
Chart 4
I. Economic Developments
World Semiconductor Demand
s.a., bil. dollars
160
CY 2022
140
CY 2021
World semiconductor shipments
120
Forecast as of Nov. 2021
100
Trend from CY 2000 to CY 2017
CY 2020
80
60
40
20
CY 00 02 04 06 08 10 12 14 16 18 20 22
Commodity Prices
Decomposition of Changes in
Commodity Prices
Commodity Prices
monthly avg., CY 2015 = 100 y/y % chg.
60
300
Crude oil (Dubai) Supply factors
Demand factors
40
Copper
Real commodity prices
20
200
0
-20
100
-40
-60
0 -80
CY 06 08 10 12 14 16 18 20
CY 00 02 04 06 08 10 12 14 16 18 20
Note: Regarding details for the right-hand chart, see Box 2 "Effects of Rising International Commodity Prices on Corporate Profits" in the July 2021 Outlook Report.
Sources: Bloomberg; OECD; Haver.
5
Chart 6
II. Price Developments
Price Developments (1)
Consumer Prices in
Producer Prices in Japan
Japan, United States, and Europe
y/y % chg.
y/y % chg.
7
20
Japan (CPI)
6
15
United States (CPI)
5
Euro area (HICP)
4
10
3
5
2
0 1
0
-5
-1
-10 -2
CY 80 85 90 95 00 05 10 15 20 CY 19 20 21
Notes: 1. In the left-hand chart, figures are the producer price index (PPI) for all commodities (adjusted to exclude the effects of the consumption tax hikes).
2. In the right-hand chart, figures for the United States and the euro area are the overall CPI and overall HICP, respectively. Figures for Japan are the CPI for all items excluding fresh
food.
Sources: Bank of Japan; Haver; Ministry of Internal Affairs and Communications.
Chart 7
II. Price Developments
Price Developments (2)
Japan's CPI
Output and Input Prices (Tankan)
Excluding Temporary Factors
y/y % chg.
DI ("rise" - "fall"), % points
80
2
Output - Input
60
Input Prices
1
Output Prices
40
20
0
0
CPI
-20
-1
(all items less fresh food, energy, and
temporary factors)
-40
CPI (all items less fresh food)
-2 -60
CY 12 13 14 15 16 17 18 19 20 21 CY 00 02 04 06 08 10 12 14 16 18 20
Notes: 1. In the left-hand chart, figures for CPI (all items less fresh food) exclude the direct effects of the consumption tax hike in April 2014. Figures for CPI (all items less fresh food, energy,
and temporary factors) are staff estimates and exclude (1) energy, (2) the effects of policies concerning the provision of free education, (3) the effects of the "Go To Travel" campaign,
which covers a portion of domestic travel expenses, and (4) mobile phone charges, from the CPI (all items less fresh food).
2. In the right-hand chart, figures are for all industries and enterprises.
Sources: Ministry of Internal Affairs and Communications; Bank of Japan.
7
Chart 8
III. Financial Conditions surrounding Firms and the Bank's Conduct of Monetary Policy
The Bank's Measures in Response to COVID-19
Supporting Corporate Financing
Special Program to Support Financing in Response to COVID-19
Purchases of CP and corporate bonds: amount outstanding of about 20 tril. yen at maximum (previous
amount outstanding of about 5 tril. yen)
Special Funds-Supplying Operations to Facilitate Financing in Response to COVID-19
Stabilizing Financial Markets
Ample and Flexible Provision of Yen and Foreign Currency Funds
Purchases of ETFs and J-REITs
ETFs: annual pace with an upper limit of about 12 tril. yen
J-REITs: annual pace with an upper limit of about 180 bil. yen
Financial Conditions (1)
Issuance Conditions for CP
Amount Outstanding of
as Perceived by Firms (Tankan)
Bank Lending
s.a., tril. yen
DI ("easy" - "severe"), % points
520
60
500
40
480
460
20
440 Trend from April 2013
to December 2019
0
420
400
-20
380
-40
360
-60 340
CY
08 10 12 14 16 18 20 08 10 12 14 16 18 20
CY
Note: In the left-hand chart, figures are for CP-issuing enterprises (all industries).
Source: Bank of Japan.
9
Chart 10
III. Financial Conditions surrounding Firms and the Bank's Conduct of Monetary Policy
Financial Conditions (2)
Lending Attitudes of Financial Institutions
Firms' Financial Positions (Tankan)
as Perceived by Firms (Tankan)
DI ("accommodative" - "severe"), % points
DI ("easy" - "tight"), % points
40
30
30
20
20
10
10
0
0
-10
-10 Large enterprises in all industries
-20 Large enterprises in all industries
Small enterprises in all industries
Small enterprises in all industries
-20
-30
Small enterprises in face-to-face
Small enterprises in face-to-face
services industry
services industry
-30
-40
CY 08 10 12 14 16 18 20
CY 08 10 12 14 16 18 20
The Bank's CPI Forecasts
y/y % chg.
2
FY 2023
FY 2022 +1.0%
+0.9%
1
0
FY 2021
+0.0%
-1
-2
CY 15 16 17 18 19 20 21 22 23 24
Note: Figures are the CPI (all items less fresh food) excluding the direct effects of the consumption tax hike in April 2014. Percentage figures indicate the medians of the Policy
Board members' forecasts (point estimates) presented in the October 2021 Outlook Report.
Sources: Ministry of Internal Affairs and Communications; Bank of Japan.
11■