takahide kiuchi : recent developments in economic activity, prices and monetary policy speech by mr takahide kiuchi, member of the policy board of the bank of japan, at a meeting with business leaders, yamanashi, 23 february 2017. * * * i. economic activity and prices in japan a. current situation of economic activity and prices and the baseline scenario of the outlook the bank of japan explains the current situation of japan ’ s economic activity and prices and the baseline scenario of the outlook in the statement on monetary policy, which is released after each monetary policy meeting ( mpm ), and in the outlook for economic activity and prices ( the outlook report ), which is published quarterly. next, i will provide an overview of the current developments in and outlook for economic activity and prices based on the latest outlook report released in january 2017. japan ’ s economy has continued its moderate recovery trend. as for the outlook, it is likely to continue growing at a pace above the potential growth rate through the projection period — that is, through fiscal 2018 — on the back of highly accommodative financial conditions and the effects of the government ’ s large - scale stimulus measures, with the growth rates in overseas economies increasing moderately. comparing the current projections with the previous ones, the projected growth rates are somewhat higher, mainly reflecting improvement in overseas economies and the yen ’ s depreciation, in addition to an upward revision to the gdp due to the comprehensive revision to gdp statistics. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food has been about 0 percent. regarding the outlook, it is likely to increase from about 0 percent and become slightly positive, reflecting developments in energy prices. thereafter, it is expected to increase toward 2 percent as the aggregate supply and demand balance ( the output gap ) improves and medium - to long - term inflation expectations rise. comparing the current projections with the previous ones, the projected rates of increase in the cpi ( all items less fresh food ) are more or less unchanged. the timing of the year - on - year rate of change in the cpi ( all items less fresh food ) reaching around 2 percent will likely be at the end of the projection period — that is, around fiscal 2018. b. my outlook i believe that japan ’ s current growth rate and inflation rate are generally stable, in light of the economy ’ s growth potential, and that there is a high probability of this stable

the trend of stable asset formation - - through the investment of surplus funds in financial assets focusing on the long term, on risk diversification, and on regular contributions - - gains traction, it will bring dynamism to household financial assets. this development will give more depth to disposable income in japan and as a result, japan's economy can expect more robust private consumption to help close the macroeconomic output gap and further boost corporate activities. with institutional support already available, such as the nippon individual savings account ( nisa ) and ideco pension plans, there is growing interest in investment trusts, especially among young people. moreover, the japanese government's council of new form of capitalism realization has announced its intention to formulate a plan to double asset income in japan. i look forward to these developments gaining momentum. as has been illustrated, i expect the virtuous cycle of income and prices to be reinforced as the dynamism of firms and employment spurs corporate growth, while the dynamism of employment and household financial assets stimulates a rise in household income. by providing accommodative financial conditions to persistently support these developments, i believe japan's economy will approach the realization of the 2 percent price stability target, which will in turn lead to its sound development. thank you. economic activity, prices, and monetary policy in japan speech at a meeting with local leaders in fukuoka august 25, 2022 nakamura toyoaki member of the policy board bank of japan chart 1 imf projections in the world economic outlook ( july 2022 ) y / y % chg. imf projections - 2 - 4 japan united states - 6 china world output euro area - 8 cy 80 source : international monetary fund ( imf ). chart 2 cpi ( less fresh food ) 3. 0 y / y % chg. 2. 5 2. 0 1. 5 1. 0 0. 5 0. 0 - 0. 5 - 1. 0 - 1. 5 mobile phone charges - 2. 0 effects of the consumption tax hike and free education policies excluding the above factors - 2. 5 - 3. 0 effects of the " go to travel " campaign energy cpi ( less fresh food ) - 3. 5 cy 17 notes : 1. figures for energy are those for petroleum products, electricity, and manufactured and piped gas charges. 2. figures for the " effects of the consumption tax hike and free education policies " from april 2020 onward are bank staff