toshihiko fukui : an overall review of the bank of japan ’ s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank ’ s semiannual report on currency and monetary control, before the committee on financial affairs, house of councillors, tokyo, 24 july 2003. * introduction * * the bank of japan ( hereafter, the bank ) submitted its semiannual report on currency and monetary control for the second half of fiscal 2002 to the diet in june 2003. i am pleased to have this opportunity to present an overall review of the bank ’ s conduct of monetary policy. today, i would like to make some remarks on the bank ’ s view of recent economic and financial developments and on the thinking behind our recent conduct of monetary policy. i. developments in japan ’ s economy economic activity remains virtually flat. private consumption continues to be weak due to the severe employment and income situation. on the other hand, business fixed investment is on a gradual recovery trend, albeit showing some fluctuations, reflecting the improvement in corporate profits. net exports are virtually flat. looking at the economic outlook, it is expected that the uptrend in exports and production will gradually resume, and this in turn will initiate the momentum for an economic recovery. this reflected expectations that growth rates in overseas economies will accelerate in the second half of 2003 partly due to diminishing uncertainty over the situation in iraq and severe acute respiratory syndrome ( sars ). the june tankan ( short - term economic survey of enterprises in japan ) released by the bank at the beginning of july 2003 showed that corporate profits were projected to continue their uptrend and also confirmed that business fixed investment was on a recovery trend. however, the recovery in domestic demand is likely to remain modest for some time, since excessive labor input and debts continue to exert downward pressure. as for the environment for exports, there continues to be substantial uncertainty about the recovery of the u. s. economy, while on the domestic front, developments in the financial system and the financial and capital markets continue to require close monitoring. regarding prices, consumer prices are projected to continue falling at the current moderate pace for the time being due to the following factors. first, the weakness in demand, technological innovation, and the streamlining of distribution channels continue to exert downward pressure on prices. second, imports of low - priced consumer goods are still increasing, although only very gradually. developments in financial

that generates synergy between wage increases and price rises, as i have explained today. i would like to close by noting that the bank will take a strong stance on continuing with monetary easing, in that it will provide a macroeconomic environment where wages are likely to increase so that the rise in inflation expectations and changes in the tolerance of price rises - - which have started to be seen recently - - will lead to sustained inflation. thank you very much for your attention. the bank's thinking on monetary policy : toward achieving the price stability target in a sustainable and stable manner speech at the kisaragi - kai meeting in tokyo june 6, 2022 kuroda haruhiko governor of the bank of japan introduction i. the bank's monetary policy conduct for the time being ii. toward achieving the price stability target of 2 percent in a sustainable and stable manner conclusion chart 1 i. the bank's monetary policy conduct for the time being real gdp in japan, the united states, and the euro area japan united states euro area 5 s. a., % points 5 s. a., % points 5 s. a., % points - 5 - 5 22 / q1 - 2. 7 change from cy 2019 average - 10 - 15 other goods exports business fixed investment private consumption real gdp - 20 - 25 cy 18 22 / q1 + 3. 7 22 / q1 + 0. 6 - 5 change from cy 2019 average change from cy 2019 average - 10 - 10 - 15 - 15 - 20 - 20 - 25 cy 18 - 25 cy 18 note : the charts show the deviation from the 2019 average. figures for business fixed investment for the euro area are those for gross fixed capital formation excluding housing investment. sources : cabinet office ; haver. chart 2 i. the bank's monetary policy conduct for the time being import prices, export prices, and real gni real gni import price index y / y % chg. exchange rate effects contract currency basis yen basis - 20 - 40 cy 09 10 11 12 13 14 15 16 17 18 19 20 21 22 export price index y / y % chg. trading gains / losses income from / to the rest of the world real gdp real gni y / y % chg. exchange rate effects contract currency basis yen basis - 2 - 4 - 20 - 40 cy 09 10 11 12 13 14 15 16 17 18 19 20 21 22 - 6 fy 95 97 99 01 03 05 07 09 11