haruhiko kuroda : the bank of japan's semiannual report on currency and monetary control statement by mr haruhiko kuroda, governor of the bank of japan, before the committee on financial affairs, house of representatives, tokyo, 18 november 2022. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from the novel coronavirus ( covid - 19 ). overseas economies have recovered moderately on the whole, but slowdowns have been observed, mainly in advanced economies. exports and industrial production have increased as a trend, with the effects of supply - side constraints waning. corporate profits have been at high levels on the whole, and business sentiment has been more or less unchanged. in this situation, business fixed investment has picked up, although weakness has been seen in some industries. the employment and income situation has improved moderately on the whole. private consumption has increased moderately, despite being affected by covid - 19. with regard to the outlook, japan's economy is likely to recover, with the impact of covid - 19 and supply - side constraints waning and with support from accommodative financial conditions and the government's economic measures, although it is expected to be under downward pressure stemming from high commodity prices and the slowdowns in overseas economies. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food has accelerated due to rises in prices of such items as energy, food, and durable goods. regarding the outlook, it is expected to decelerate from the beginning of calendar year 2023 toward the middle of fiscal 2023 because the contribution of such price rises to this cpi is likely to wane. thereafter, it is projected to accelerate again moderately on the 2 back of improvement in the output gap and rises in medium - to long - term inflation expectations and in wage growth. concerning risks to the outlook, there have been extremely high uncertainties for japan's economy, including the following :

moderate pace, in non - commodity manufacturing industries with a high exposure to international trade. here in quebec, and in central canada more generally, the strong canadian dollar and increased energy costs have posed a significant challenge to manufacturers and service providers facing international competition. the bank closely follows developments in all sectors of the economy, partly through its quarterly business outlook survey conducted by its regional offices, including the one here in montreal. for canada as a whole, including quebec, exports have continued to grow, despite the higher canadian dollar. and investment in machinery and equipment suggests that a good number of firms are taking advantage of the stronger exchange rate to improve their productivity and enhance their competitiveness. and, of course, healthy final domestic demand, underpinned by rising incomes and relatively low interest rates, has continued to support economic growth in canada during this period of significant economic adjustment. but the adjustment process is not over. we continue to experience changes in the prices of commodities relative to other products, in the exchange rate, and in the world demand for canadian goods and services. energy prices, in particular, have surged over the past year, and the associated effects are still working their way through our economy. increased competition from abroad and structural changes in demand are other important economic forces at play that also require adjustment. conclusion i'd like to conclude by summarizing my key messages. recent years have been marked by significant global economic change. a rise in the prices of commodities relative to those of other goods that we in canada produce, the appreciation of our currency, increased international competition, and the rapidly growing emerging - market economies of asia present challenges and opportunities for canadian businesses and individuals. adjusting to these developments is difficult but necessary. the adjustments that have already taken place suggest that canadians are responding effectively to the challenge. for its part, the bank of canada will continue to help facilitate adjustment by conducting monetary policy with a view to keeping the economy operating at its potential and inflation close to the target. we will be closely monitoring economic developments and assessing their impact. the monetary policy framework — the inflation target working in concert with a floating exchange rate — will continue to be fundamental in facilitating the adjustments that businesses and individuals are making to deal with changes in the global economy. the bank is constantly working to improve its research and analysis, as well as its conduct of monetary policy. but we remain confident that our monetary policy framework will continue to provide the firm foundation needed as we work to help canada deal effectively with global economic change.