may 25, 2022 bank of japan opening remarks at the 2022 boj - imes conference hosted by the institute for monetary and economic studies, bank of japan kuroda haruhiko governor of the bank of japan i. introduction it is my great pleasure to welcome you all to the 2022 boj - imes conference. on behalf of the conference organizers, i would like to thank you all for your participation. this is the 27th conference since its start in 1983. due to the continuing effects of covid19, the conference is being held online, as last year. the previous conference was very fruitful with lively and wide - ranging discussions on the theme of " adapting to the new normal : perspectives and policy challenges after the covid - 19 pandemic. " since then, however, the environment surrounding central banks has changed dramatically. given these developments, the themes for discussion appear to have expanded rapidly. that is why i think this is the ideal opportunity for central banks, international institutions, and academia to gather and exchange opinions. against this background, the theme of this year's conference is " new dimensions and frontiers in central banking. " now i would like to provide an overview of the theme, focusing on the new dimensions faced by central banks and the frontiers they are developing. ii. new dimensions in central banking first of all, i would like to point out two challenges currently facing central banks. a surge in inflation the first challenge is a global surge in inflation. for most central bankers and researchers, this is not something they could have imagined at the emergence of covid - 19. the unique feature of inflation this time is that both supply and demand inflationary factors have occurred at the same time. on the supply side, constraints on production capacity have given rise to inflationary pressure. these constraints include disruptions to the supply of raw materials, a shortage of semiconductors, and labor shortages. on the demand side, as economic activity has recovered globally since last year, solid demand from households has materialized. a shift in demand from services to goods has occurred amid the continued pandemic. these two factors have brought about upward inflationary pressure, especially on the price of goods including the price of commodities. that said, when it comes to these supply and demand effects, there are both similarities and differences between countries. for example, in japan, household pent - up demand has been limited and the recovery of aggregate demand has been slower than in europe and the united

to require attention, given that there are some uncertain factors including geopolitical developments and their economic implications. on the domestic side, stock prices are weak. hence, careful monitoring is required of progress in the resolution of the nonperforming - loan problem and its effects on stock prices, corporate finance, and the economy. on the price front, import prices are on a rising trend with some fluctuations, reflecting developments in prices of overseas commodities such as crude oil. domestic corporate goods prices have been declining gradually on the whole with the continued fall in machinery prices, despite the rise in import prices and the improved supply - demand balance in materials industries. consumer prices and corporate services prices have also been declining gradually. looking at the conditions influencing price developments, import prices are projected to be firm for the time being due mainly to developments in crude oil prices. on the other hand, factors such as the ongoing technological innovations in machinery and the streamlining of distribution channels will continue to push prices downward. meanwhile, the overall state of supply and demand is expected to this report is based on data and information available at the time of the bank of japan monetary policy meeting held on march 4 and 5, 2003. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on march 4 and 5, 2003 as the basis for monetary policy decisions. continue exerting downward pressure on prices, with domestic demand continuing to be weak for a while. however, the low levels of inventories and the improvement in the supply - demand balance in materials industries will support prices in corporate transactions. against this background, the decline in domestic corporate goods prices is likely to be mitigated in the near term. the pace of year - on - year decline in consumer prices is expected to become somewhat slower, as medical costs are projected to rise from april due to public insurance reforms. as for the financial environment, the outstanding balance of current accounts at the bank of japan is recently moving at around 20 trillion yen, as the bank provides ample liquidity. under these circumstances, in the money markets the overnight call rate continues to hover at very close to zero percent. moreover, longer - term interest rates continue to be at low levels on the whole, and the markets remain steady to date as the fiscal year - end approaches. yields on long - term government bonds declined again to the range of 0. 7 - 0. 8 percent after moving in the range of 0. 8 -