may 10, 2018 bank of japan japan's economy and monetary policy speech at the kisaragi - kai meeting in tokyo haruhiko kuroda governor of the bank of japan ( english translation based on the japanese original ) introduction it is my great pleasure to have the opportunity today to speak at the kisaragi - kai meeting. five years have passed since the bank introduced quantitative and qualitative monetary easing ( qqe ) in april 2013, and japan's economy - - which had been deteriorating under prolonged deflation - - has improved significantly. recently, corporate profits have been at record high levels, and the labor market is close to full employment. although the price stability target of 2 percent has not been achieved yet, japan's economy is at least no longer in deflation, which is generally defined as a sustained decline in prices, after having overcome negative shocks such as the large drop in crude oil prices. over the past year, the year - on - year rate of change in the consumer price index ( cpi ) has increased moderately, registering around 1 percent of late. today, i will first explain in detail the current situation of economic activity in japan and its outlook, while outlining the outlook for economic activity and prices ( outlook report ) released after the monetary policy meeting ( mpm ) held at the end of april. then, i would like to talk about the bank's thinking behind the conduct of monetary policy. i. the current situation of economic activity and its outlook overseas economies let me start by talking about economic developments. i will first touch on developments in overseas economies. overseas economies have continued to grow firmly. the last time i gave a speech at the kisaragi - kai meeting last december, i referred to the remark by christine lagarde, the managing director of the international monetary fund ( imf ), that the global economy is showing " the broadest - based recovery in the last 10 years. " in the almost half year since then, this synchronous growth of the global economy, with both the advanced and emerging economies growing in a well - balanced manner, has become more pronounced. such synchronous growth can also be observed at the industry level ( chart 1 ). while the global economy had continued to recover moderately over the past few years, led mainly by the nonmanufacturing sector, since around last year, production and trade activity in the manufacturing sector have picked up substantially, reflecting an expansion in it

document will have to be created ". reading through his most recent publications, it seems to me that president klaus ’ s views are anchored in a two - pillar philosophy ( like the ecb policy strategy ) • the first pillar is the traditional divide between the individual and the collectivity, or the private sphere and the public sphere, and • the second pillar is the appropriate level at which to deliver public goods, the european level or the national one. on the first pillar he describes himself " as a conservative economist and politician … reading mises, hayek or friedman and … being their follower and true believer ". as such his views have been compared with those of former prime minister margaret thatcher who also opposed conservative liberalism to mainstream conservative ideas embedded in the idea of a social market economy. president klaus considers that this latter thinking leads to " a european paternalistic, overregulated welfare state " and that " extensive regulation of economic activities has structural similarities with the communist past ". he writes that “ slow economic growth, high unemployment, loss of competitiveness, the aging of the european population, the crises of pension systems or of health - care systems, the insufficient quality of education, the problem of immigration and multiculturalism all have their roots in this freedomconstraining welfare system. these views are more often reflected among economic observers. martin wolf recently wrote in the financial times : “ there is something rotten in the welfare state of europe. the time has come for europeans to ask themselves the unthinkable : can their vaunted social model endure "? wolf speaks of " the hypertrophy of the state " which is " maternal, protective, but also infantilising : its high taxes and benefits discourage anybody from doing too well, while ensuring that nobody does badly. its services are available to all, but are also mediocre and inflexible. " we are in the trap, hayek denounced : the view that society can be rationally planned and directed. our question, as pragmatists, is : can the system be mended? is the lisbon agenda not an appropriate response? is there no middle ground between the invisible hand that creates very visible wounds and a stifling overregulation unable to deliver growth and jobs? what about the nordic model combining welfare state and growth? what does history teach us? is communism not rooted in the excesses of unrestricted economic freedom? how do we best prevent economic, social and even political difficulties in