日本央行-日本经济和货币政策：在名古屋与商界领袖会晤时的讲话（英）

November6,2023BankofJapan

Japan'sEconomyandMonetaryPolicy

SpeechataMeetingwithBusinessLeadersinNagoya

UEDAKazuo

GovernoroftheBankofJapan

(EnglishtranslationbasedontheJapaneseoriginal)

1

Introduction

ItismygreatpleasuretohavetheopportunitytodaytoexchangeviewswithadistinguishedgatheringofbusinessleadersintheTokairegion.IwouldliketotakethischancetoexpressmysincerestgratitudeforyourcooperationwiththevariousactivitiesoftheBankofJapan'sNagoyaBranch.Ilookforwardtoexchangingviewswithyoutoday.Inordertodeepenitsunderstandingonthepositiveeffectsandsideeffectsoftheunconventionalmonetarypolicymeasuresthathavebeenimplementedoverthepast25years,andtogaininsightsthatwillbeusefulforfuturepolicyconduct,theBankhasbeenreviewingmonetarypolicyfromabroadperspective.Inproceedingwiththereview,ithasbeenexchangingviewswithpeopleinvariousfields.IwouldappreciatehearingyourcandidopinionstodayontopicssuchasJapan'seconomicactivityandprices,changesincorporatebehavior,andthepositiveeffects

andsideeffectsoftheBank'svariouspolicymeasuresoverthepast25years.

Beforehearingfromyou,IwouldliketotalkaboutdevelopmentsinJapan'seconomicactivityandpricesandexplaintheBank'sthinkingontheconductofmonetarypolicy,whileoutliningthelatestOutlookforEconomicActivityandPrices(OutlookReport),whichwas

releasedlastweek.

I.EconomicDevelopments

CurrentSituationofEconomicActivityandBaselineScenariooftheOutlook

Letmestartbytalkingabouteconomicdevelopments.Japan'seconomyhasrecoveredmoderately.Itislikelytocontinuerecovering,andinthelatestOutlookReport,theBankprojectsthattheeconomywillgrowatarelativelyhighrateof2.0percentforfiscal2023andthencontinuegrowingatarateofaround1percentforfiscal2024and2025,whichis

somewhataboveitspotentialgrowthrate(Chart1).

Lookingatthecorporatesector,althoughexportshavebeenweakforIT-relatedandothergoodsamidthelackofmomentuminoverseaseconomies,exportsoverallhavebeenathigherlevelsthanbeforethepandemic,mainlyonthebackofariseinautomobile-relatedexports,whichreflectsawaningofsupply-sideconstraintsforsemiconductors(Chart2).Inthissituation,corporateprofitshavemarkedanewrecordhigh,mainlyduetothe

normalizationofdomesticeconomicactivityandtoprogressinthepass-throughofcost

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increasestosellingprices.Theexpansioninprofitshasspreadtobusinessfixedinvestment.Theplansforsuchinvestmentforfiscal2023intheSeptemberTankan(Short-TermEconomicSurveyofEnterprisesinJapan)indicatethatinvestmentislikelytoincreaseclearly,byaround10percentfromfiscal2022(Chart3).Lookingahead,thecorporatesectorisexpectedtocontinuetoseeimprovement,asavirtuouscycleoperatesinwhich

improvementincorporateprofitsleadstoariseinbusinessfixedinvestment.

Turningtothehouseholdsector,privateconsumptionhasbeenonanincreasingtrend,reflectingthematerializationofpent-updemand,i.e.,demandthathadbeensuppressedduringthepandemic.Itshouldbenotedthat,althoughwagehikeshavebeenachievedthroughtheannualspringlabor-managementwagenegotiations,thepaceofincreaseinprivateconsumptionhasbeenmoderatesofar,withpricerisescontinuing(Chart4).Asfortheoutlook,pent-updemandisprojectedtograduallyslow,butitisexpectedthatwageswillcontinueincreasingfirmlyinreflectionofhighprices,andthatanunderpinningof

privateconsumptionfromwageincreaseswillbecomeevident.

RisksSurroundingEconomicActivity

However,thereareextremelyhighuncertaintiessurroundingthisbaselinescenario.

Onemajorriskconcernsoverseaseconomies.AlthoughtheInternationalMonetaryFund(IMF)projectsinitslatestWorldEconomicOutlook(WEO)thattheglobaleconomywillcontinuegrowingatamoderaterateofaround3percent,eacheconomyfacesdownsiderisks.Inadvancedeconomies,inflationrateshavebeendecliningbutarestillsomewhathighrelativetocentralbanktargets.IntheUnitedStatesinparticular,astheeconomyhascontinuedtoseefirmdevelopments,long-terminterestrateshaverisensignificantlysincesummer,withmarketparticipantsexpectingprolongedmonetarytightening.Inaddition,itispossiblethattheimpactofrapidpolicyinterestratehikesinadvancedeconomiestodatewillturnouttobesignificant,withatimelag,onboththerealeconomiesandfinancialsystems.Giventhis,dueattentionneedstobepaidtotheimpactofthisriskonglobalfinancialandforeignexchangemarkets.AttentionisalsowarrantedonwhetherornottheChineseeconomywillloseitsrecoverymomentumasitfacesstructuralissuessuchas

adjustmentsintherealestatemarket.Moreover,itisnecessarytokeepaneyeontheriskof

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upwardpressurebeingexertedonpricesofcommodities,includinggrains,duetofactors

suchasgeopoliticalriskssurroundingUkraineandtheMiddleEast.

Onthedomesticfront,withprogressinthepass-throughoftheriseinimportpricestoconsumerprices,attentioncontinuestobewarrantedontheriskthatwageincreaseswillnotcatchupwithinflationandprivateconsumptionwillbeconstrainedasaresult.Infact,withregardtofoodandotheritemsthathaveseenlargepriceincreases,households'defensiveattitudestowardspending--suchasshiftingdemandtowardinexpensiveproducts--havebeenobserved.Inorderforprivateconsumptiontoremainresilientevenafterpent-updemandslows,itisnecessarythatwagesandpricesriseinawell-balancedmanner,whichI

willelaborateonlater.

II.PriceDevelopments

CurrentSituationofandOutlookforPrices:UpwardRevisionsAttributabletotheFirst

Force

IwillnowturntopricedevelopmentsinJapan.InthelatestOutlookReport,theBankprojectsthattheyear-on-yearrateofincreaseintheconsumerpriceindex(CPI)forallitemsexcludingfreshfoodwillremainhighat2.8percentforfiscal2023and2024andthenbeat1.7percentforfiscal2025(Chart5).TheprojectedratesofincreaseinthisCPIfor

fiscal2023and2024arehigherthanthosepresentedintheJulyOutlookReport.

Twoforcesareatworkbehindtheinflationrateremainingrelativelyhighforthetimebeing.Thefirstforceisinflationarypressureresultingfromthepass-throughoftheriseinimportpricestoconsumerprices.Theriseinimportprices,includingofenergyandgrains,hasspreadtoconsumerpriceswithatimelag.Thesecondforceisinflationarypressureassociatedwiththemechanismwherebywagesandpricesinteractandincreaseontheback

ofcontinuingeconomicimprovement.

ThemainreasonwhytheBank,initslatestOutlookReport,significantlyrevisedupwarditsCPIforecastsfortheperiodthroughfiscal2024isthat,ofthosetwoforces,itdeemedthatthefirstforcewillpersist.Withregardtofoodanddailynecessitiesinparticular,whilethe

pass-throughofthepastriseinimportpricestosellingpriceshasdiminishedforsomeitems

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andindustries,somefirmshavedecidedtonewlyraisetheirsellingpricesaspricehikeshavespread,includingamongtheircompetitors.Moreover,assumingthattheeffectsofpushingdownenergypricesfromthegovernment'seconomicmeasureswilldissipatenextspring,therecentriseincrudeoilpriceswillexertinflationarypressure,mainlyforfiscal

2024.

Itshouldbenotedthattheyear-on-yearrateofincreaseinimportprices,whichhavebeenthedriverofthefirstforce,deceleratedafterreachingapeakinthemiddleoflastyear,andtherateofchangehasbeennegativesincearoundspringthisyear.Inaddition,therateofincreaseinproducerpriceshasclearlyslowedsincethebeginningoftheyear,andtheyear-on-yearratesofincreaseinpricesofitemssuchasfoodanddailynecessitiesatsupermarketsandotherretailstoreshavestartedtodeceleraterecently(Chart6).Takingthesepointsintoaccount,theeffectsofthefirstforcepushinguppricesarelikelytograduallywane,evenifariseincrudeoilprices,forexample,causesthatprocesstotaketime.Basedonthisthinking,theBankprojectsthattheyear-on-yearrateofincreaseintheCPIforallitemsexcludingfreshfoodforfiscal2025willbelowerthanthatfortheperiod

throughfiscal2024.

TheSecondForceandSustainableandStableAchievementofthePriceStabilityTarget

Thatsaid,theprojectedyear-on-yearrateofincreaseintheCPIforfiscal2025isat1.7percentforallitemsexcludingfreshfoodandat1.9percentforallitemsexcludingenergyinadditiontofreshfood.TheBankprojectsthat,evenafterthefirstforcediminishes,theinflationratewillnotreturntotherangeof0.0-1.0percent,whichwasthepre-pandemic

level.

ThisisbecausetheBankexpectsthatunderlyingCPIinflationwillincreasegraduallytoward2percentasthesecondforcepushingupprices--namely,thevirtuouscycle

betweenwagesandprices--strengthens.

TheBankhasbeenaimingtoachievethepricestabilitytargetof2percentinasustainableandstablemanner,accompaniedbywageincreases,asthesecondforcestrengthens.

Recently,someaspectsoffirms'behaviorhavebeguntoshiftmoretowardraisingwages

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andprices.Onthewageside,thewagegrowthrateagreedinthisyear'sannualspringlabor-managementwagenegotiationsmarkedthehighestlevelin30years,partlyonthebackofpricerises.Asforpricesetting,somefirmsinindustrieswherepersonnelexpensesaccountforalargeproportionofcostshavereportedthattheyhaveraisedpricesinanticipationofacontinuedincreaseinpersonnelexpenses.LookingattheTankan,figuresforfirms'outlookforoutputpricesforoneyearaheadhavedeclinedbecauserawmaterialcostshavesettleddown,whilethoseforfiveyearsaheadhaveincreasedsomewhat,particularlyforthenonmanufacturingindustry.Thissuggeststhatfirmsmayhavestartedtoexpectthattherewillbeacontinuedincreaseincostssuchaswages.Inaddition,medium-tolong-terminflationexpectationshaverisenmoderately,whichseemstohaveinfluenced

firms'wage-andprice-settingbehavior(Chart7).

Inthissituation,thelikelihoodofrealizingtheoutlookforachievingthepricestabilitytargetof2percentseemstobegraduallyrising.However,astherearehighuncertaintiesovertheextenttowhichthesecondforcewillstrengthen,sustainableandstableachievementofthepricestabilitytargetisnotyetenvisagedwithsufficientcertaintyatthispoint.Mainlyduetotheexperienceofprolongedlowgrowthanddeflation,thebehaviorandmindsetbasedontheassumptionthatwagesandpriceswillnotincreaseeasilyhavebeenentrenchedinJapanesesociety,continuingtomakeitdifficultforthesecondforcetotakeeffect.Itisnecessarytocloselyexaminewhetherchangesinfirms'wage-andprice-settingbehaviorwillbecomewidespreadandthevirtuouscyclebetweenwagesandpriceswillintensify.Iwouldliketoraisetwopointsthatmaybecrucialinmakingsuchan

examination.

Thefirstpointconcernswhetherwagehikeswillcontinueandtakeholdinsociety.Inparticular,nextyear'sannualspringlabor-managementwagenegotiationsareanimportantaspectoftheexamination,anditisnecessarytocloselymonitordevelopmentsinthesenegotiations.Regardingtheenvironmentsurroundingwages,labormarketconditionshavesteadilytightened.TheTankanshowsthatthenet"insufficient"inthediffusionindex(DI)foremploymentconditionshasexpandedtoalevelclosetoitspre-pandemicpeak.Asthelabormarketforregularemployeeslookingfornewjobshasexpanded,itmayhavebecome

easierfortheeffectsofthetighteningoflabormarketconditionstospillovertowages

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(Chart8).Corporateprofits,whicharethesourceofwagehikes,havemarkedanewrecordhighonthewhole.However,thepaceofimprovementinprofitsvariesacrossindustriesandfirmsizes.Somefirms,especiallysmallandmedium-sizedfirms,havereportedthattheyhadraisedwagesthisyearatatimewhentheirprofitabilitywasnotnecessarilyadequate.Itisthusunclearwhetherthesefirmswillcontinuewithmovestoraisewagesnextyear.TheBankwillexaminechangesinfirms'wage-settingbehaviorbycontinuingtoassessdevelopmentsinlabormarketconditionsandcorporateprofits,andbycarefullyanalyzing

corporatebehaviorusingbothmacrodataandanecdotalinformation.

Thesecondpointconcernswhetherfirms'stancewillshiftmoretowardraisingtheirsellingpriceswhiletakingaccountofincreasesincostssuchaswages.Inorderforthevirtuouscyclebetweenwagesandpricestoberealized,firmsneedtostablysecureprofitsasasourceforfuturewagehikes.AsIpointedoutearlier,therehavebeennewdevelopmentsinsomefirms'price-settingbehavior.However,manyarguethat,unlikerawmaterialcosts,increasesinwagesandotherindirectcostsaredifficulttopassontosellingprices.TheBankneedstomonitordevelopmentsgoingforwardtoseeifchangesinfirms'price-setting

behaviorwillbecomewidespread.

III.TheBank'sConductofMonetaryPolicy

BasicThinkingontheConductofMonetaryPolicy

Now,IwouldliketotalkabouttheBank'sconductofmonetarypolicy.

AsIhaveexplainedthusfar,theBank'sprojectionthatunderlyingCPIinflationwillincreaseisbasedontheexpectationthatthevirtuouscyclebetweenwagesandpriceswillintensify.Inthisregard,itisencouragingtoseethatsomeaspectsoffirms'behaviorhavebeguntoshiftmoretowardraisingwagesandprices.However,asImentionedearlier,itisstillunclearwhetherthevirtuouscyclewillintensifyasexpected.Inthissituation,theBank'sbasicthinkingontheconductofmonetarypolicyisthatitwillpatientlycontinuewithmonetaryeasingundertheframeworkofyieldcurvecontrol,aimingtosupportJapan's

economicactivityandtherebyfacilitateafavorableenvironmentforwageincreases.

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ConductofYieldCurveControl

Meanwhile,inordertopatientlycontinuewithmonetaryeasingundertheframeworkofyieldcurvecontrol,itisnecessarytostrikeabalancebetweentheeconomicstimuluseffectsstemmingfromstrictlykeepinglong-terminterestratesatlowlevelsandtheresultingside

effects.

Basedonthisthinking,theBankdecidedtomodifytheconductofyieldcurvecontrolattheMonetaryPolicyMeetingheldlastweek.Specifically,whiletheBankmaintainedthetargetlevelof10-yearJapanesegovernmentbond(JGB)yieldsataroundzeropercent,itdecidedtoconductyieldcurvecontrolwiththeupperboundof1.0percentfortheseyieldsasareferenceandtocontroltheyieldsmainlythroughlarge-scaleJGBpurchasesandnimblemarketoperations.OperationsthroughwhichtheBankofferedtopurchaseanunlimitedamountof10-yearJGBsat1.0percenteverybusinessdaywereceased.Thesedecisionsweremadebecause,withextremelyhighuncertaintiessurroundingeconomiesandfinancialmarketsathomeandabroad,theBankjudgeditappropriatetoincreasetheflexibilityintheconductofyieldcurvecontrol,sothatlong-terminterestrateswillbeformedsmoothlyinfinancialmarketsinresponsetofuturedevelopments(Chart9).Inaphasewhereupwardpressureisexertedoninterestrates,strictlycappinglong-terminterestratescouldaffectthefunctioningofbondmarketsandthevolatilityinotherfinancialmarkets.Themodification

oftheconductofyieldcurvecontrolislikelytocontributetomitigatingsuchsideeffects.

Eveninthismodifiedconductofyieldcurvecontrol,theBankwillcontinuewithlarge-scaleJGBpurchasesand,inaphaseofrisinginterestrates,willkeepmakingnimbleresponsesthroughmarketoperationsdependingonfactorssuchasthelevelsandthepaceofchangeinlong-terminterestrates.Therefore,theBankdeemsthat10-yearJGByieldsareunlikelytobesignificantlyabove1percentevenifupwardpressureisexertedonthem.Althoughlong-terminterestratescouldrisesomewhat,realinterestrates,whichareadjustedbyinflationexpectations,areimportantincapturingtheeffectsofmonetarypolicyoneconomicactivityandprices.AsIexplainedearlier,sincelastyear,inflationexpectationshaverisenmoderatelyand,despiteanincreaseinlong-terminterestrates,realinterestrateshavecontinuedtobenegative.Asrealinterestratesarelikelytoremainso,

sufficientlyaccommodativefinancialconditionsareexpectedtobemaintained.

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ConcludingRemarks

Inclosing,IwouldliketotouchontheTokairegion'seconomyfromamedium-to

long-termperspective.

Letmefirstcommentontheprogresswithinnovation.TheTokairegionhasbeenJapan'simportantbaseformonozukuri(manufacturing)anditscompetitivenesshasbeensupportedbyconstantinnovation,whichhasseennewdevelopmentsrecently.Forinstance,astheelectrificationofvehiclesprogresses,majorchangeshavestartedtotakeplaceintheautomobileindustry,includingitssupplychains,withtechnologiesthatcouldtransformtheindustryitselfbeinglaunchedoneafteranother.Inaddition,numerousfirmsandlocalgovernmentshavebeencollaboratingon,forexample,buildingsupplychainsforhydrogenandammoniaaswellascarryingoutexperimentswithaviewtocreatingdemandforthesefuelsources.Moreover,firmsincutting-edgeindustries,includingtheroboticsindustry,havebeengatheringintheTokairegion,withactivesupportfromlocalgovernments.Itisencouragingtoseesucheffortsbeingmadetoensurethattheregioncontinuestobea

wellspringofinnovationforJapan.

Furthermore,theTokairegionhasbeenattractingattentionforathemeparkthataimsatcoexistencewithnature,andprogresshasbeenmadeineffortstoenhancetheappealof

citiesintheregion,includingredevelopmentofcitycenters.

IwouldliketoclosebyexpressingmyhopethattheTokairegionwillincreaseitsappealfurtherandbechosenbymanypeoplebothasabaseformonozukuriandasatouristdestination,andthatitseconomywilltherebydevelopinasustainableanddiversemanner.

Thankyouverymuchforyourattention.

Japan'sEconomyandMonetaryPolicy

SpeechataMeetingwithBusinessLeadersinNagoya

November6,2023

UEDAKazuo

GovernoroftheBankofJapan

Introduction

I.EconomicDevelopments

II.PriceDevelopments

III.TheBank'sConductofMonetaryPolicy

ConcludingRemarks

I.EconomicDevelopments

Chart1

580

570

560

550

540

530

520

510

500

490

FY

TheBOJ'sForecastsforRealGDP

(Oct.2023OutlookReport)

,

s.a.,ann.tril.yen

FY2025

+1.0%

FY2024

FY2023

+2.0%

+1.0%

13141516171819202122232425

Note:TheforecastspresentedarethemediansofthePolicyBoardmembers'forecasts.ThevaluesofrealGDPforfiscal2023onwardarecalculatedbymultiplyingtheactualfigureforfiscal2022byallsuccessiveprojectedgrowthratesforeachyear.

Sources:CabinetOffice;BankofJapan.

1

I.EconomicDevelopments

Chart2

CorporateSector:Exports

RealExportsRealExportsbyItem

115

110

105

100

95

90

85

80

75

CY

s.a.CY2019=100

,

RealexportsfromJapan

Worldtradevolume

151617181920212223

120

110

100

90

80

70

60

50

CY

s.a.CY2019=100

,

Motorvehiclesandrelatedgoods

1920212223

120

110

100

90

80

70

60

50

s.a.CY2019=100

,

IT-relatedgoods

(leftscale)

Semiconductor

productionequipment

(rightscale)

180

160

140

120

100

80

60

40

CY1920212223

Note:Intheleft-handchart,figuresfortheworldtradevolumearethoseforworldrealimports.Thefigurefortheworldtradevolumefor2023/Q3istheJuly-Augustaverage.

Sources:BankofJapan;CPBNetherlandsBureauforEconomicPolicyAnalysis;MinistryofFinance.

2

I.EconomicDevelopments

Chart3

CorporateSector:ProfitsandBusinessFixedInvestment

CurrentProfitsBusinessFixedInvestment

16

14

12

10

8

6

4

2

0

s.a.tril.yen

,

Largefirms

Smallandmedium-sizedfirms

20

15

10

5

0

-5

-10

-15

-20

+13.1%

.6%

y/y%chg.

+7

Actual

Plannedinvestmentincurrent

fiscalyearasoftheSept.surveyofeachyear

CY070911131517192123

FY070911131517192123

Notes:1.Intheleft-handchart,figuresarebasedontheFinancialStatementsStatisticsofCorporationsbyIndustry,Quarterlyandexclude"financeandinsurance."Figuresfrom2009/Q2onwardexcludepureholdingcompanies.

2.Intheright-handchart,figuresarebasedontheTankan,includingsoftwareandR&Dinvestmentsandexcludinglandpurchasingexpenses.R&DinvestmentisnotincludedbeforetheMarch2017survey.Figuresareforallindustriesincludingfinancialinstitutions.

Sources:MinistryofFinance;BankofJapan.

3

I.EconomicDevelopments

Chart4

HouseholdSector

ScheduledCashEarnings

5

4

3

2

1

0

-1

-2

-3

-4

-5

EmployeeIncome

y/y%chg.

Nominalwages(totalcashearnings)

Numberofemployees

Employeeincome

Realemployeeincome

ConsumptionActivityIndex

7

6

5

4

3

2

1

0

-1

-2

-3

y/y%chg.

Scheduledcashearningsforfull-timeemployees

Hourlyscheduledcashearningsforpart-timeemployees

110

105

100

95

90

85

80

75

70

65

60

s.a.,CY

2019=100

Totalrealprivateconsumption

Ofwhich,services

CY17181920212223

CY17181920212223

CY17181920212223

Notes:1.Intheleft-handandmiddlecharts,Q1=March-May,Q2=June-August,Q3=September-November,Q4=December-February.FiguresarebasedoncontinuingobservationsfollowingthesamplerevisionsoftheMonthlyLabourSurvey.

2.Inthemiddlechart,Employeeincome=Totalcashearnings(MonthlyLabourSurvey)×Numberofemployees(LabourForceSurvey).FiguresforrealemployeeincomearebasedonstaffcalculationsusingtheCPI(lessimputedrent).

3.Intheright-handchart,figuresfortotalrealprivateconsumptionaretherealConsumptionActivityIndex(travelbalanceadjusted)basedonstaffcalculations,whichexcludeinbound

Sources:ciirsandCommunications;BankofJapan.4

II.PriceDevelopments

Chart5

TheBOJ'sForecastsfortheCPI

(Oct.2023OutlookReport)

DevelopmentsoverTimeForecasts

5

4

3

2

1

0

-1

-2

y/y%chg.

Energy

Foodproducts

Goods(lessfoodproducts)

Services

CPI(lessfreshfood)

CPI(lessfreshfoodandenergy)

+3.8%

+2.8%+2.8%

+1.9%

+1.9%

+1.7%

CPI(lessfreshfood)

CPI(lessfreshfoodandenergy)

y/y%chg.

FY232425

5

4

3

2

1

0

-1

-2

CY1920212223

Note:Intheright-handchart,figuresarethemediansofthePolicyBoardmembers'forecasts.

Sources:MinistryofInternalAffairsandCommunications;BankofJapan.

5

II.PriceDevelopments

Chart6

CurrentSituationSurroundingtheFirstForce

ImportPricesProducerPrices

High-FrequencyDatafor

ConsumerPrices

60

50

40

30

20

10

0

-10

-20

y/y%chg.

y/y%chg.

18

Producerpriceindex

Servicesproducerpriceindex

15

12

9

6

3

0

-3

-6

CY1920212223

12

10

8

6

4

2

0

-2

-4

y/y%chg.

T-index(NikkeiCPINow)

SRI-HitotsubashiUnitValue

PriceIndex

CY1920212223

CY1920212223

Notes:1.Intheleft-handchart,figuresaretheimportpriceindex(yenbasis).

2.Inthemiddlechart,figuresexcludetheeffectsoftheconsumptiontaxhike.

Sources:BankofJapan;NowcastInc.;ResearchCenterforEconomicandSocialRisks,HitotsubashiUniversity.

6

Chart7

y/y,ann.avg.,%

chg.fromthecurrentlevel,%

2.5

5.04.54.03.53.02.52.01.51.00.50.0

-0.5

5.04.54.03.53.02.52.01.51.00.50.0

-0.5

Marketparticipants(QUICK,2to10yearsahead)Economists1(6to10yearsahead)

Economists2(7to11yearsahead)

Households(overthenext5years)

Firms(5yearsahead)

1yearahead

3yearsahead

5yearsahead

2.0

1.5

1.0

0.5

0.0

II.PriceDevelopments

CurrentSituationSurroundingtheSecondForce:ChangesinCorporateBehavior

Firms'OutlookforOutputPricesintheTankanInflationExpectations

Manufacturing

Nonmanufacturing

chg.fromthecurrentlevel,%

1yearahead

3yearsahead

5yearsahead

CY1416182022

CY05070911131517192123

CY1416182022

Note:Intheright-handchart,"Economists1"showstheforecastsofeconomistsintheConsensusForecasts,while"Economists2"showstheforecastsofforecasterssurveyedfortheESP

Forecast.FiguresforhouseholdsarefromtheOpinionSurveyontheGeneralPublic'sViewsandBehavior,estimatedusingthemodifiedCarlson-Parkinmethodfora5-choicequestion.Figuresforfirmsshowtheinflationoutlookofenterprisesforgeneralprices(allindustriesandenterprises,average)intheTankan.

7

Sources:BankofJapan;QUICK,"QUICKMonthlyMarketSurvey<Bonds>";JCER,"ESPForecast";ConsensusEconomicsInc.,"ConsensusForecasts."

II.PriceDevelopments

Chart8

CurrentSituationSurroundingthe