august 2, 2023 bank of japan japan's economy and monetary policy speech at a meeting with local leaders in chiba uchida shinichi 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 leaders in administrative, economic, and financial areas in chiba prefecture. i would like to take this chance to express my sincere gratitude for your cooperation with the activities of the bank of japan. today, i will explain japan's economic activity and prices, as well as the bank's conduct of monetary policy. i. current situation of and outlook for economic activity i will start by talking about japan's economic developments. japan's economy has recovered moderately. economic activity in both the household and corporate sectors has improved steadily, as pent - up demand, i. e., demand that had been suppressed during the pandemic, has materialized. japan's economy is likely to continue recovering moderately, supported for the time being by pent - up demand and subsequently by increases in wages and corporate profits. in the bank's outlook for economic activity and prices ( outlook report ) released last week, it is projected that the economic growth rates will be in the range of 1. 0 - 1. 5 percent for fiscal 2023 and 2024 and around 1 percent for fiscal 2025 ( chart 1 ). in what follows, i will explain developments in the household and corporate sectors. first, regarding the household sector, private consumption has increased steadily at a moderate pace, mainly for services such as accommodations as well as eating and drinking, as pent - up demand has materialized due in part to the reclassification of covid - 19 under the infectious disease control law ( chart 2 ). recovery in inbound tourism demand has also been a tailwind for the face - to - face services industry. in addition to pent - up demand, what underpins the increase in private consumption is growing expectations for improvement in household income. the wage growth rate agreed in the annual spring labor - management wage negotiations this year marked its highest level in three decades, including the base pay increase ( chart 3 ). until around early 2023, there were many who argued that, even if large firms were able to raise wages, it would be difficult for local small and medium - sized firms to do the same. however, concerns over the possibility of being unable to hire and retain employees without raising wages trump

recent south african reserve bank forecast, which has downside risks attached to it, an increase to 2, 2 per cent is projected for 2015. this is far from the levels of around 4, 0 to 5, 0 per cent needed to arrest the large unemployment problem in south africa. the year - on - year inflation rate, as measured by the consumer price index ( or cpi ) for all urban areas, registered 4, 4 and 3, 9 per cent in january and february 2015 respectively, which is well within the inflation target range of 3 to 6 per cent. this improved trend in inflation was, however, mainly due to lower petrol prices. recent oil price and exchange rate developments have dampened the inflation outlook. moreover, core inflation, which excludes food, electricity and petrol prices, remained near the upper end of the inflation target range, measuring 5, 8 per cent in both january and february 2015. this is an indication that underlying inflationary pressures persist. bis central bankers ’ speeches the bank ’ s inflation forecast released at the time of the most recent monetary policy committee ( mpc ) meeting last month, indicated that inflation was projected to average 4, 8 per cent in 2015, an upward revision from the forecast of 3, 8 per cent in january 2015. additionally, inflation expectations, as reflected in the bureau for economic research survey conducted during the first quarter of 2015, showed that all respondents expect inflation to return to levels around the upper end of the target range in the next two years. the rand / dollar exchange rate has exhibited significant volatility lately, which was in line with developments in some of the other emerging - market currencies. since the beginning of this year to the end of march, the rand depreciated by about 5, 0 per cent against the us dollar, and traded in a wide band between r11, 54 and r12, 52. this weakening of the rand against the us dollar has, however, not resulted in depreciation on a trade - weighted basis as a result of it having appreciated against the euro by 7, 3 per cent since january 2015. given the euro ’ s larger weight of around 30 per cent when compared with 13, 7 per cent for the us $, the nominal effective exchange rate has been relatively stable since the beginning of 2014. the current - account deficit registered 5, 4 per cent of gross domestic product on an annual basis in 2014 compared to 5, 8 per cent for 2013. more recently, the