january 14, 2025 bank of japan japan's economy and monetary policy speech at a meeting with local leaders in kanagawa himino ryozo deputy governor of the bank of japan ( english translation based on the japanese original ) introduction thank you for joining us today. thank you also for your support for the bank of japan and its yokohama branch. kanagawa and the modernization of japan in 1853, awakened by the blasts of cannons which commodore perry ’ s fleet fired near uraga, japan started the process of modernization, opening the port of yokohama and its window to the world. yokohama was at the forefront of japan's drive for " civilization and enlightenment, " building steel mills, laying down railroads, and installing gas lamps. since then, the japanese economy has surprised the world with two miracles and has retreated from these miracles as a result of two major setbacks ( chart 1 ). the first miracle was the modernization achieved for the first time in the non - western world. within only half a century, a small agricultural nation on the eastern edge of asia became one of the world's five major powers. however, this achievement was reduced to ashes by world war ii. the central area of yokohama city, for example, was razed to the ground in a major air raid on may 29, 1945. the second miracle was japan's subsequent post - war reconstruction and rapid economic growth, and the industrial zone between tokyo and yokohama played a central role in this. japan came to dominate world markets, one after another, starting with textiles and spreading to steel, electrical equipment, automobiles, machinery, and semiconductors. the japanese economy survived the two oil shocks, and in the latter half of the 1980s, japan was the world's largest creditor, the world's eight largest banks were japanese, and the world's largest and third largest stock exchanges were those in tokyo and osaka. in 1988, i accompanied toyoo gyohten, vice - minister of finance for international affairs at the time, who is from yokohama, to the annual meetings of the imf - world bank in berlin. it is said that japan played a leading role in these meetings. gyohten - san said at the press conference after the meetings, " i have never seen japan attracting so much attention as this time. " to resolve the debt problems of developing countries, japan put forward the miyazawa plan, which aimed to substitute the baker plan initiated by the united states, signaling that

has been that ( 1 ) given the extremely accommodative financial conditions, the level of interest rates is to be raised if japan's economy is to follow a path of sustainable growth under price stability, and ( 2 ) the pace of increase in interest rates should be determined in accordance with improvements in the economic and price situation without any predetermined view. so far, weak inflationary pressures have given the bank latitude in conducting monetary policy. the actual interest rate adjustments have therefore been slow based on a thorough assessment of the future path of the economy and prices and its likelihood, as well as both upside and downside risks. the bank's basic thinking in this regard will remain the same in the conduct of future monetary policy. that is, while confirming that the japanese economy remains likely to follow a path of sustainable growth under price stability and assessing relevant upside and downside risk factors, the bank will adjust the level of interest rates gradually in accordance with improvements in the economic and price situation. we believe that, from the long - term perspective, the conduct of monetary policy in such a manner will prevent the risk of larger swings in economic activity and prices from materializing and will help to realize sustainable growth under price stability. conclusion japan's economy is expanding moderately. corporate activity has been increasing due partly to strong exports, as can be seen here in the kansai region, and the positive influence is clearly spreading throughout the wider economy as evident in the declining unemployment rate. in order for japan's economy to continue sustainable growth in the face of various challenges including the declining population, it is crucial for all regions and industries to persist with their efforts to innovate. since, along with the kanto and tokai regions, the kansai region is pulling japan's economy forward, i fully anticipate that your originality and inventiveness will continue to play a leading role. as for the bank, we will continue to support your efforts through our conduct of monetary policy.