december 5, 2018 bank of japan japan's economy and monetary policy speech at a meeting with business leaders in niigata masazumi wakatabe deputy governor of the bank of japan ( english translation based on the japanese original ) introduction it is my pleasure to have the opportunity today to exchange views with administrative, financial, and business leaders in niigata prefecture. i also would like to take this opportunity to express my sincere gratitude for your cooperation with the activities of the bank of japan's niigata branch. this is my first time to attend a meeting of this kind since i was appointed deputy governor of the bank of japan in march this year. it is said that people here in the echigo and sado regions historically have overcome severe natural environment - - such as dealing with heavy snow, crossing over mountain ridges, and managing floods - - with diligence, patience, and great ingenuity. 1 i would like to hear your views on the current status of the local economy, as well as your candid opinions about the bank's policies and activities. first, i will briefly explain developments in japan's economic activity and prices, and then talk about the bank's conduct of monetary policy. i. current developments in economic activity and prices let me start by talking about the current developments in economic activity. japan's economy is expanding moderately. the real economic growth rate excluding the effects of price movements, after registering relatively high growth of 3. 0 percent on an annualized basis in the april - june quarter of this year, marked negative growth of minus 1. 2 percent in the july - september quarter. this likely is mainly due to temporary factors accompanying natural disasters that occurred successively this summer. such a view is underpinned by the fact that exports and production, which had declined due to the effects of natural disasters, have turned to an increase since october. the current economic recovery phase likely has lasted for six years already, which mostly overlaps with the period of quantitative and qualitative monetary easing ( qqe ) that the bank introduced in april 2013, and this month its duration is expected to be the same as the tanaka keiichi et al., niigata - ken no rekishi, 2nd ed. ( tokyo : yamakawa shuppansha ltd., 2009 ), 7. longest post - war recovery phase in the mid - 2000s ( chart 1 ). 2 i would like to point out two characteristics of

##ity to consume than other generations and to firms ’ efforts to capture new demand. meanwhile, business fixed investment is projected to increase moderately, mainly due to the resumption of postponed investment for the maintenance and replacement of items such as machinery and to investment related to disaster prevention and energy. upward pressure on the economy from the public demand side is expected to gather full momentum as seen in the fact that the value of public works contracted, a leading indicator of public investment, has already increased significantly. the key to ensuring that this trend toward economic recovery continues and to achieving the price stability target of 2 percent in terms of the year - on - year rate of change in the consumer price index ( cpi ) is that improvements in business performance lead to increases in employee income. looking at the recent employment and income situation, supply and demand conditions in the labor market have improved, as evident in the unemployment rate and the active job openings - to - applicants ratio, and the year - on - year rate of change in the number of employees has been positive. in this situation, despite the downward pressure resulting from the uptrend in the ratio of part - time employees, the year - on - year rate of change in nominal wages per employee has turned slightly positive, with special cash bis central bankers ’ speeches earnings for june – which include summer bonus payments – showing an increase for the first time in three years. while uncertainty regarding the outlook remains, the bank would like to confirm whether these developments also lead to a rise in scheduled cash earnings. keeping these points in mind, i would like to summarize the outlook for japan ’ s economy for the next three fiscal years. while the economy will be affected by the front - loaded increase and subsequent decline in demand prior to and after the two scheduled consumption tax hikes, it is likely to continue growing at a pace above its potential, as a trend, as a virtuous cycle among production, income, and spending is maintained. in the bank ’ s interim assessment in july of the april 2013 outlook for economic activity and prices ( hereafter the outlook report ), the median of the policy board members ’ forecasts for the economic growth rate is a somewhat high 2. 8 percent for fiscal 2013 due to the effects of various economic measures and the front - loaded increase in demand, 1. 3 percent for fiscal 2014 partly due to the subsequent decline in demand, and 1. 5 percent for fiscal 2015. 2. prices next, i will talk about price