August 25, 2021
Bank of Japan
Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Local Leaders in Miyazaki
(via webcast)
NAKAMURA Toyoaki
Member of the Policy Board
I. Economic and Price Developments at Home and Abroad
A. Recent Developments in Economic Activity and Prices
I will begin my speech by talking about recent developments in economic activity and prices.
Overseas economies have recovered on the whole, led by advanced economies and China,
despite the growing impact of the spread of the novel coronavirus (COVID-19) and its
variants (Chart 1).
Against this background, Japan's economy has picked up as a trend, although it remains in a
severe situation (Chart 2). Exports and production continue to increase steadily. Business
performance of firms also has improved on the whole. On the other hand, private consumption
has been stagnant due to weakness in consumption of face-to-face services, such as eating
and drinking as well as accommodations. On the price front, the year-on-year rate of change
in the consumer price index (CPI) for all items less fresh food, or the core CPI, has been at
around 0 percent recently, mainly due to the rise in energy prices, despite being affected by
COVID-19 and the reduction in mobile phone charges (Chart 3).1 The rate of change in the
core CPI remains slightly positive and has been steady when excluding the temporary effects
of energy prices and mobile phone charges. Given that the recent large reduction in charges
for mobile phones is a temporary price change in one specific sector, it is rather unlikely to
affect people's medium- to long-term inflation expectations. Nonetheless, I will continue to
closely monitor price developments.
B. Outlook for Economic Activity and Prices
Let me touch on future developments in overseas and domestic economies.
As the impact of COVID-19 wanes due to progress with vaccinations, overseas economies
are likely to continue growing, albeit with variation across countries and regions, supported
also by aggressive macroeconomic policies taken mainly in advanced economies.
In this situation, Japan's goods exports are projected to continue increasing steadily, supported
mainly by an expansion in digital-related demand and a recovery in business fixed investment,
both on a global basis. Private consumption and inbound tourism consumption, the latter of
which is categorized under services exports, are expected to be substantially affected by
COVID-19 for the time being but likely to recover as the impact of the pandemic wanes due
to, for example, the progress with vaccinations both at home and abroad and with
strengthening of domestic medical response capabilities. As the economy recovers, the year-
on-year rate of change in the CPI is expected to increase moderately (Chart 4).
C. Risk Factors for Economic Activity and Prices
I should note that the outlook is subject to considerable uncertainty and call particular
attention to downside risks for the time being, mainly due to the impact of the spread of
COVID-19, caused in particular by variants across Japan and abroad. Considering
developments in the more distant future, I am particularly attentive to the following three
factors.
The first is pent-up demand for services consumption. In the United States, the amount
outstanding of household cash and deposits increased by 3.1 trillion dollars relative to the
trend as of end-March 2021 (Chart 5). Economic activity in the country has been buoyed by
the materialization of pent-up demand with the vaccination progress. Similarly in Japan, the
amount outstanding reached a historical high of 1,056 trillion yen as of end-March 2021,
increasing by 37 trillion yen relative to the trend. If Japan's vaccine rollout and strengthening
of medical response capabilities make progress and this contributes to reducing the impact of
COVID-19, households will try to make up for lost spending opportunities, thereby increasing
consumption by more than in normal times. This is expected to result in a materialization of
pent-up demand, thereby stimulating economic activity. My view is that the timing of such
materialization has been somewhat delayed, mainly due to the impact of the resurgence of
COVID-19, but economic activity thereafter could become more vigorous than expected.
The second factor is firms' price-setting behavior. Reducing prices is not an effective measure
to attract customers under the current circumstances as vigilance against COVID-19
continues. Firms also suffer higher costs due to infection prevention measures and to rises in
prices of imported raw materials with the global economic recovery. I therefore consider that
firms' price cuts that aim at stimulating demand will still not be observed widely. Having said
that, as seen in some cases in the United States, it is important from a longer-term perspective
that firms improve their profitability through, for example, passing on cost increases by
raising prices at the time of the materialization of pent-up demand in order to repay the loans
that have grown, mainly in the face-to-face services sector, due to the decline in sales. I am
closely monitoring whether firms will adopt a price-setting behavior that reflects the
improvement in demand so that their loan repayments and efforts to increase productivity
will make steady progress.
The third factor is the path of firms' medium- to long-term growth expectations. In the Bank
of Japan's June 2021 Tankan (Short-Term Economic Survey of Enterprises in Japan), the
business conditions DI for all industries and enterprises improved for the fourth consecutive
quarter. The survey also showed an 8.1 percent decrease in the business fixed investment plan
for all industries and enterprises, including financial institutions, for fiscal 2020 from the
previous fiscal year and a subsequent 9.4 percent increase in the plan for fiscal 2021, returning
to a level broadly similar to that of the fiscal 2019 plan (Chart 6). Thus, there has been no
evidence of a decline in firms' medium- to long-term growth expectations. However, attention
should be paid to the fact that the business fixed investment plan for fiscal 2021 includes
investment carried over from the previous fiscal year. I am paying careful attention to firms'
investment behavior, because in order for the economy to achieve sustainable growth, firms'
investment to accelerate structural reforms so as to address digitalization and climate change
-- I will revisit these issues later -- needs to lead to a sustainable improvement in productivity
and in turn an increase in their medium- to long-term growth expectations.
II. Conduct of Monetary Policy
Let me now turn to the Bank's policy conduct.
The Bank has conducted powerful monetary easing since March 2020 in response to COVID-
19 through the following three measures (Chart 7). The first is the Special Program to Support
Financing in Response to the Novel Coronavirus (COVID-19) to provide support, mainly for
corporate financing. The second is
an ample and flexible provision of funds, mainly by
purchasing Japanese government bonds (JGBs) and conducting the U.S. dollar funds-
The third is purchases of exchange-traded funds (ETFs) and Japan real
supplying operations.
estate investment trusts
(J-REITs). As indicated in the findings of the Assessment for Further
Effective and Sustainable Monetary Easing released in March 2021, the Bank's responses
have had positive effects, coupled with the government's measures and active efforts by
financial institutions.
Climate change -- which has increasingly been regarded both at home and abroad as an issue
that requires innovative changes -- could exert an extremely large impact on developments in
economic activity and prices as well as financial conditions from a medium- to long-term
perspective. Thus, it is relevant to the Bank's mandate to achieve price stability and financial
system stability. From this perspective, the Bank, at the Monetary Policy Meeting held in July
2021, decided on the preliminary outline of a new fund-provisioning measure to support
financial institutions' efforts on climate change (Chart 8).
In this measure, the Bank takes the approach of providing funds to financial institutions for
investment or loans they make to address climate change based on their own decisions. The
aim is to avoid its direct involvement as much as possible in micro-level resource allocation.
The guidelines, or taxonomies, for classifying economic activities depending on the
contribution to addressing climate change are still under discussion both at home and abroad.
However, if we wait for these debates to be settled, this will considerably delay the actions
on climate change. I believe that the Bank's approach has the advantage of enabling it to
support private sector initiatives to tackle this important challenge as promptly as possible
while also ensuring flexibility in responding to changes in the situation.
The Bank will consider the details of this new measure to increase effectiveness through an
exchange of opinions with financial institutions and other entities, and will likely start the
fund-provisioning under the measure within 2021. To realize a sustainable society, I believe
that financial institutions' investment or loans to address climate change are important in
supporting the efforts of firms that aim to meet Japan's target of reducing greenhouse gas
emissions and in increasing firms' medium- to long-term growth expectations. Thus, I hope
that the Bank's new measure will further encourage such investment and lending activities by
financial institutions.
III. Structural Changes in Japan's Economy
A. The "Lost Two Decades" and Deflation
Next, I would like to share my view on structural changes in Japan's economy and the
challenges they pose from a longer-term perspective, based on my experience at a private
firm I worked at from 1975 to 2020.
Up until the 1985 Plaza Accord, the yen remained weak against the U.S. dollar, generally
hovering above 200 yen (Chart 9). In that situation, Japan's economic growth was export
driven. At the same time, industrial clusters were formed that incorporated small and medium-
sized firms within the country. Firms took advantage of the growth in overseas economies by
way of product exports and distributed their profits to households through sustained increases
in employment of domestic workers and labor income. Against this background, a virtuous
cycle operated in Japan where (1) households deposited their surplus funds at banks and
profited from the high interest income brought about by the strong growth of the domestic
economy, ultimately increasing consumption, (2) banks earned interest margins on the loans
they made to firms, and (3) firms used borrowed funds for fixed and research and
development (R&D) investments to drive exports and production.
After the Plaza Accord, in the second half of the 1980s, the yen appreciated against the U.S.
dollar to 120-130 yen. Partly because the government encouraged a structural change of the
economy from one that is export driven to one that is driven by domestic demand,
manufacturers started to transfer their production bases overseas. Furthermore, in Japan, the
nonmanufacturing industry saw rapid growth, fueled by strong private consumption on the
back of an increase in household disposable income (Chart 10). There was a view at the time
that Japan's economy had achieved domestic demand-driven growth.2
However, after the bubble burst in the first half of the 1990s, firms were burdened by the
"three excesses" in employment, production capacity, and debt.3 The working styles that
involve traditional employment practices were slow in changing. Many firms addressed the
decline in earnings by means of cost structure reforms, mainly by squeezing fixed expenses
such as labor and depreciation costs and shifting their production bases to developing
economies with cheap labor costs. Therefore, the realignment of their business portfolio,
which would enhance their value-added, was postponed.
Given this, as well as the further appreciation of the yen, Japan slipped into deflation from
the latter half of the 1990s. Let me elaborate on the effects of deflation from the viewpoint of
firms, albeit in simplified terms (Chart 11). Amid deflation, which persisted for about 15 years,
Japanese firms were met with higher prices of imported raw materials brought about by the
growth of overseas economies and with inflows of low-priced goods from developing
economies. As a result, they experienced decreases in sales and profits as well as lower
productivity. Firms then took measures to reduce fixed expenses. However, as I recall, in
many cases they (1) prioritized maintaining employment of their workers, mainly due to the
traditional practice of lifetime employment, (2) postponed the realignment of their business
portfolio, which would enhance their value-added otherwise, and (3) held down wage growth
due to sluggish productivity growth. They also had little choice but to restrain fixed and R&D
investments, which led to delayed development of attractive and competitive new products
and services. Consequently, firms were in a vicious cycle of sluggish demand, excluding that
for daily necessities such as food, and of further price cuts to maintain demand. Moreover,
the prolonged deflation undermined firms' prospects for future increases in sales and profits
and reduced their capacity to invest in innovative initiatives such as digital utilization.
Turning to households, about 70 percent of those employed in Japan work for small and
medium-sized firms. Many of these firms were met with cost competition from developing
economies and weak domestic demand owing to structural problems of Japan's economy --
namely, the declining birth rate, the aging population, and the drop in the working-age
population. Therefore, they had little room to raise the wages of their workers, and the
workers in turn hardly benefited from the growth of overseas economies. Under these
circumstances, households did not have hopes for a sustained increase in wages based on the
lifetime employment practice and seniority-based wages, which created anxiety for the future.
To prepare for uncertainty, I think that households were increasingly inclined to hold back on
risky asset investment and instead hoard cash and deposits.
As illustrated, both firms and households postponed innovation and investment, being
entrenched in deflation that persisted for about 15 years. Consequently, Japan lagged other
countries in the pace of innovation, which in turn led to sluggish productivity growth.
B. Progress of Globalization and Household Income Structures
Subsequently, bold monetary easing policy and flexible fiscal policy -- part of a strategy that
the Bank started implementing in 2013 -- served to arrest the deflationary trend. Various other
measures were also put in place to tap into growth in overseas economies, including ones to
stimulate demand from inbound tourism, which is classified as service exports, and this
caused such exports to assume a larger role in driving growth (Chart 12). Likewise in the
private sector, following the Global Financial Crisis, major manufacturers seeking to capture
foreign demand made further inroads into overseas markets4 while firms, including leading
nonmanufacturing firms, turned increasingly to acquisitions from around 2013, leading to
further growth in outward direct investment (Chart 13). Reflecting these developments, the
surplus in primary income -- or the positive balance associated with foreign investment -- has
expanded, serving as the main factor in the current account surplus (Chart 14).
The achievement of globalization has not been without its share of pain brought about by
needed structural reforms, but it has enabled leading firms to tap into growth in overseas
economies in their improved consolidated performance and in the form of higher dividends
and royalties from overseas subsidiaries. Growth in consolidated performance is reflected in
stock prices and feeds into higher dividends paid out to shareholders. These efforts to reform
corporate structure have borne fruit: developments in the Tokyo Stock Price Index (TOPIX),
which represents the corporate value of listed Japanese firms, have been increasingly inclined
to follow the world's trend of nominal GDP (Chart 15).
Let me turn to the income structure of Japanese households over this period. Employee
compensation has risen moderately since around 2013, but only to the extent of making up
for former decreases (Chart 10). After peaking in 1991, interest income continued to slide
until 2005, after which it has languished. Dividend income has increased modestly but not
enough to offset the fall in interest income. Reflecting these developments in income and
changes in the social structure, household disposable income had been sluggish after reaching
its peak in 1998, but finally started to improve from the first half of the 2010s. By contrast,
in the United States, employee compensation, interest income, and dividend income have all
risen, with disposable income for 2020 more than triple that of the first half of the 1990s. In
Germany, while interest income is on a slight decline, employee compensation and dividend
income are rising by a wider margin, and disposable income has roughly doubled from the
amount of the early 1990s.
Household financial assets in Japan continued to increase even during the so-called "lost two
decades," almost doubling from 1,017 trillion yen at the end of fiscal 1990 to 1,946 trillion
yen at the end of fiscal 2020. However, the breakdown shows that growth in equity and
investment trusts has been sluggish compared with cash and deposits. This is also evident
when comparing the household financial asset composition in Japan with the United States
and Europe: in Japan, cash and deposits are markedly higher, at 54 percent, while equity and
investment trusts combined are lower, at 14 percent (Chart 16). The upshot is that employee
compensation accounts for an extremely high proportion of household income in Japan.
As I touched on earlier, because Japanese firms that have moved forward with globalization
efforts have been able to tap into growth in overseas economies, if households gradually
expand their investments in the equity of these firms or in investment trusts that invest in
these firms, they will reap the benefit of overseas economic growth over the longer term, as
higher dividends and other investment income feed into their disposable income. It is a rough
estimate assuming all other things are equal, but if Japanese households start to invest 20
percent of their financial assets, or about 400 trillion yen, shifting their cash and deposits into
equity and investment trusts, at a 1.6 percent dividend yield, this will translate into an annual
increase in disposable income of 5 trillion yen, or roughly 2 percent. If this is then channeled
into private consumption, it is expected to engender a virtuous cycle in the domestic economy.
In Japan, as in other advanced economies, I would say that people can be more willing to
hold assets over the long term and shift their asset structure to one that derives stable income
through dividends. In doing so, they would invest in risk assets such as investment trusts
while appropriately diversifying risks, placing a part of their savings in cash and deposits. To
be sure, history has seen repeated turmoil in the financial markets and plunges in stock prices,
but I believe that many listed firms have overcome these events and are pursuing sustainable
growth while consolidating their positions in global markets. This is reflected in their stock
prices.
Currently, some observers note that public interest in investment, such as in investment trusts,
is on the rise in Japan, especially among younger people who have limited negative
experience of market turmoil, such as the bursting of the economic bubble. Indeed, the total
number of individual stock investors as of the end of fiscal 2020 was up by 3.08 million from
the previous fiscal year, the seventh straight year of growth. This signals a change in the deep-
rooted propensity of Japanese people to hold their financial assets in the form of cash and
deposits. Adding to this momentum, the working population is increasingly starting to select
their own financial products: of pension funds sponsored by firms, the number of subscribers
to defined contribution corporate pension plans, where employees select products of their
choice, has risen to approximately 7.5 million.5 Given the increase in financial literacy, risk-
taking behavior has been spreading among individual investors seeking to increase their
returns by taking on short-term investment risks on the assumption that investments will be
made in the long term. Consequently, the yields of defined contribution pension plans have
come to exceed those of defined benefit pension plans. Coupled with rising public interest in
environmental, social, and governance (ESG) and other aspects of sustainability, my hope is
that household financial assets that have long been tucked away in the form of cash and
deposits will make a greater contribution to economic growth and social change in Japan.
Meanwhile, I also hope that firms will strengthen their business strategies to achieve
sustainable growth and build corporate value, and that the financial sector will further
encourage these developments.
IV. Digitalization and Climate Change Response
A. Digitalization
In addition to these structural problems facing the domestic economy, Japan is currently
dealing with sweeping changes associated with digitalization and response to climate change.
The delay in Japan's digitalization has become evident once again due to the COVID-19
pandemic. The World Digital Competitiveness Ranking of the Institute for Management
Development (IMD) shows that South Korea and China are steadily improving their digital
competitiveness, while Japan remains at a low ranking among the Group of Seven (G7)
countries and major Asian economies (Chart 17). Japanese firms have a similar perception
about their digital competitiveness. Developments in software investment among
Organisation for Economic Co-operation and Development (OECD) countries reveal that
investment by the United States, the United Kingdom, Germany, and France has risen sharply
since 2000, growing by 2.4 times in the United States and France and doubling in the United
Kingdom and Germany in 2018. In Japan, such investment grew by about 1.2 times from
2000 to 2002 but has since been lackluster (Chart 18). Software investment for all industries
and enterprises, including financial institutions, in the Bank's June 2021 Tankan registered a
7.4 percent year-on-year decrease for fiscal 2020. It was projected to register a 16.1 percent
year-on-year increase for fiscal 2021, but this still represents only about a 7 percent increase
over the fiscal 2019 level. At this rate it will take a decade for such investment in Japan to
double from the current level.
Digitalization can be classified into the following three types, according to its stage6: (1)
digitization, such as converting analog or paper-based data into digital format, or automating
business and manufacturing processes; (2) digitalization, such as digitalizing individual
business operations and manufacturing processes, or incorporating digital features into
existing products; and (3) digital transformation (DX), such as transforming business models
using digital technology.
One of the reasons Japanese firms have fallen behind in digitalization is the slow
implementation of digitization for raising the efficiency of existing business operations,
which was hindered by the practice of lifetime employment in the country, among other
factors. As a result, I believe that digitalization and DX, which have already become
mainstream in Europe and the United States, have been largely neglected in Japan. I also think
the lack of economic metabolism comes into play: there are very few startups or small and
medium-sized firms that make use of digital technology in an open-minded manner so as to
grow into so-called unicorns with a valuation of over 1 billion U.S. dollars.
Recently, the shortage of digital technology professionals and firms' weak commitment to
business transformation seem to be key obstacles to raising digital competitiveness in Japan
(Chart 19). However, management's awareness of the need for business transformation
through digitalization is higher than ever due to the pandemic. In a survey on IT trends7 of
Japanese firms, when asked what problems require immediate action on the part of
management, 70 percent of firms responded, "working style reforms," such as remote work,
while about half answered, "decision-making for accounting, personnel management, and
other matters, and revision of work processes," while half also answered, "changes in the way
products and services are provided." Digitization and digitalization still seem to be a task for
many firms. However, I am hopeful that Japanese firms will promote digitization,
digitalization, and also DX to make use of digital technology -- including cloud computing
and other services -- as a tool to drive growth, and further step up the pace of actions in
reforming their business structures and boosting productivity.
B. Response to Climate Change
Climate change is a global challenge that will have a broad and large impact on our society
and economic activity into the future. Discussions are underway at international forums, such
as the G7 and the Group of Twenty (G20), to consider international initiatives, and making
headway in addressing climate change will require various entities in society and the
economy to actively play their roles.
As the central bank of Japan, the Bank has been communicating with financial institutions
and engaging in international discussions. As various stakeholders, including the government
and firms, accelerate their efforts concerning climate change, the Bank, for its part, has
decided on a comprehensive strategy to further its efforts on climate change consistent with
its mandate of achieving price stability and ensuring the stability of the financial system
(Chart 20). One measure under the strategy is the new fund-provisioning measure I explained
earlier, under which the Bank will provide funds to financial institutions for investment or
loans they make to address climate change.
This is a crucial first step, but transforming the economy, industry, and society in order to
achieve carbon neutrality by 2050 will require establishing an ecosystem that can support a
monumental amount of private funds invested and recovered in a sustainable manner, and it
will be necessary to keep a close eye on the progress of transformation overseas. In this regard,
the European Union expects more than 1 trillion euros (130 trillion yen) worth of public and
private investment in environmental fields by 2030 and is exploring the introduction of
measures such as a Carbon Border Adjustment Mechanism to build an ecosystem in which
the costs of investment can be steadily recovered. It is putting in place a framework to
facilitate the flow of private sector funds inside and outside the region into environmental
areas by, for example, formulating a taxonomy and proposing a regulation regarding green
bond issuance.
As many investments that address climate change are long-term, the steady supply of risk
money on a large scale is necessary. To this end, financial institutions and institutional
investors are being called on to have strategic discussions with the firms that actually invest
in climate change initiatives, and to harness their expertise in enhancing the functioning of
the market to carry out efficient fund allocation.
Outside Japan, the financing of investments that address climate change is growing, mainly
through the direct financing markets, such as via the issuance of stocks and green bonds. For
instance, green bond issuance worldwide has more than tripled in the last four years, from
80.4 billion U.S. dollars in 2016 to 285.8 billion U.S. dollars in 2020 (Chart 21). Issuance in
Japan has also ballooned in recent years. However, the amount is about 1 trillion yen in 2020;
thus, it remains small compared to the scale of Japan's economy and further growth is
expected.
In response, the Japanese government announced plans to establish an international green
finance center and is working with the Tokyo Stock Exchange to develop the green bond
market. Various steps to ensure investor confidence in green bonds will be instrumental in
stimulating this market. For example, firms need to enhance their climate change-related
disclosure in terms of both quality and quantity, work to prevent "greenwashing," or the guise
of environmental friendliness, and create a framework that allows investors to obtain useful
information for their investment decisions.
My hope is that these reforms will create an ecosystem that facilitates the steady recovery of
investment costs and enables monumental investments to be carried out sustainably. I will
continue to keep a close eye on the progress of transformation regarding climate-related
issues, steadfastly review and make adjustments to the Bank's measures where needed, and
consider how a central bank can encourage firms' efforts on climate change so as to realize a
sustainable society.
Thank you.
Economic Activity, Prices,
and Monetary Policy in Japan
Speech at a Meeting with Local Leaders in Miyazaki
(via webcast)
August 25, 2021
NAKAMURA Toyoaki
Bank of Japan
Chart 1
IMF Projections in the World Economic Outlook
y/y % chg.
16
World output
14
United States
12
Euro area
IMF projections
(July 2021 WEO)
China
10
ASEAN5
8
6
4
2
0
-2
-4
-6
-8
CY 00 02 04 06 08 10 12 14 16 18 20 22
Note: ASEAN5 consists of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.
Source: IMF.
Chart 2
Japan's Real GDP
s.a., ann., q/q % chg.
25
20
15
10
5
0
-5
-10
-15
-20
Private demand Public demand
-25
Net exports Real GDP
-30
-35
CY 09 10 11 12 13 14 15 16 17 18 19 20 21
Source: Cabinet Office.
Chart 3
Japan's CPI (Less Fresh Food)
y/y % chg.
2
2015-base
1
0
-1
Mobile phone charges
Effects of the "Go To Travel" campaign
Effects of the consumption tax hike and free education policies
2020-base
Energy
-2
Excluding the above factors
CPI (less fresh food)
-3
CY 1 6 1 7 1 8 1 9 2 0 2 1
Notes: 1. Energy consists of petroleum products (gasoline, kerosene, and liquefied propane), electricity, and manufactured and
piped gas charges.
2. Figures for the "effects of the consumption tax hikes and free education policies" from April 2020 onward are based
on staff estimations and include the effects of measures such as free higher education introduced in April 2020.
Source: Ministry of Internal Affairs and Communications.
Chart 4
Outlook for Economic Activity and Prices as of July 2021:
Forecasts of the Majority of Policy Board Members
y/y % chg.
Real GDP CPI (all items less fresh food)
+3.5 to +4.0 +0.3 to +0.6
Fiscal 2021
[+3.8] [+0.6]
Forecasts made in +3.6 to +4.4 0.0 to +0.2
April 2021 [+4.0] [+0.1]
+2.6 to +2.9 +0.8 to +1.0
Fiscal 2022
[+2.7] [+0.9]
Forecasts made in +2.1 to +2.5 +0.5 to +0.9
April 2021 [+2.4] [+0.8]
+1.2 to +1.4 +0.9 to +1.1
Fiscal 2023
[+1.3] [+1.0]
Forecasts made in +1.2 to +1.5 +0.7 to +1.0
April 2021 [+1.3] [+1.0]
1. Figures in brackets indicate the medians of the Policy Board members' forecasts (point estimates).
Notes:
2. The forecasts of the majority of the Policy Board members are constructed as follows: each Policy Board member's forecast takes the form of
a point estimate -- namely, the figure to which he/she attaches the highest probability of realization. These forecasts are then shown as a range,
with the highest figure and the lowest figure excluded. The range does not indicate the forecast errors.
3. The CPI forecasts in this table are based on the previous 2015-base index.
Source: Bank of Japan.
Chart 5
Cash and Deposits Held by Households
United States Japan
tril. yen
tril. USD
1,100
19
1,050
17
37 tril.
3.1
yen
tril.
1,000
15
USD
950
13
900
Trend line for
2010-2019
11
Trend line for
850
2010-2019
9
800
7
750
700
5
CY
10 11 12 13 14 15 16 17 18 19 20 21 CY 10 11 12 13 14 15 16 17 18 19 20 21
Note: The figures for the United States include MMF.
Sources: Federal Reserve; Haver; Bank of Japan.
Chart 6
Business Fixed Investment
y/y % chg.
20
Private nonresidential investment (SNA, nominal)
Private nonresidential investment (SNA, nominal)
15
Tankan Tankan (planned inves