kazuo ueda : the bank's semiannual report on currency and monetary control statement by mr kazuo ueda, governor of the bank of japan, before the committee on financial affairs, house of councillors, tokyo, 18 june 2024. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy has recovered moderately, although some weakness has been seen in part. exports have been more or less flat. with corporate profits improving, business fixed investment has been on a moderate increasing trend. the employment and income situation has improved moderately. private consumption has been resilient, although the impact of price rises has remained and automobile sales have continued to be pushed down by a suspension of shipment at some automakers. with regard to the outlook, japan's economy is likely 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 against the background of factors such as accommodative financial conditions. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food has been in the range of 2. 0 - 2. 5 percent recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass - through to consumer prices of cost increases led by the past rise in import prices have waned. regarding the outlook, while the effects of the pass - through to consumer prices of cost increases led by the past rise in import prices are expected to wane, the rate of increase is projected to be pushed up through fiscal 2025 by factors such as a waning of the effects of the government's economic measures pushing down cpi inflation. meanwhile, underlying cpi inflation is expected to increase gradually and, in the second half of the projection period of the april 2024 outlook for economic activity and prices, it is likely to be at a level that is generally consistent with the price stability target of 2 percent. concerning risks to the outlook, there remain high uncertainties surrounding japan's economic activity and prices, including developments in overseas economic activity and prices

when it declined significantly due to the covid - 19 shock. for the october - december quarter, the level of real gdp recovered to 2. 6 percent lower than the 2019 average. however, since the turn of 2021, downward pressure stemming from the impact of a resurgence of covid - 19 from last autumn has intensified in the face - to - face services sector, such as eating and drinking as well as accommodations. that said, unlike last spring, when economic activity in a wide range of sectors was constrained, that in sectors other than face - to - face services has been maintained to a large degree in the current phase, mainly supported by a recovery in world trade and stay - at - home consumption. although economic developments are still susceptible to the impact of covid - 19, a pick - up trend has been maintained. japan's economy, with the impact of covid - 19 waning gradually, is likely to follow an improving trend, albeit moderately, supported by a recovery in external demand, accommodative financial conditions, and the government's economic measures. the real gdp growth rate for fiscal 2021, which is starting in a few days, is expected to be clearly positive, rebounding from the contraction seen in fiscal 2020 and partly due to the effects of the government's additional economic measures. the year - on - year rate of change in the consumer price index ( cpi ) has been negative due to the impact of covid - 19 and temporary factors that push down prices, such as the past decline in crude oil prices. that said, when excluding the effects of the temporary factors, the rate of change has been slightly positive, and price developments have continued to be firm compared with the degree of deterioration in economic activity. as for the outlook, the year - on - year rate of change in the cpi is likely to continue to be negative for the time being, but thereafter it is expected to turn positive and then increase with the effects of temporary factors that push down prices dissipating and the economy improving. this is the baseline scenario for the outlook for economic activity and prices, in which risks remain skewed to the downside. although the wider vaccination rollout is a positive move, attention should continue to be paid for the time being to the consequences of covid - 19 and their impact. the bank's policy responses to the impact of covid - 19 with covid - 19 affecting the economy, the bank has conducted powerful