BoJ's Sakuari: Japan's economy is likely to continue its moderate expansion

The Bank of Japan has recently published the speech by Makoto Sakurai, Member of the Policy Board, that was delivered at a meeting with Business Leaders in Gunma in late May. Below are some key takeaways.

• Japan's economy is expanding moderately, with steady growth in overseas economies as well as highly accommodative financial conditions and government spending.
• Labor market conditions have tightened steadily as the number of employees has increased. The active job openings-to-applicants ratio has surpassed the peak level observed during the bubble period.
• Japan's economy is likely to continue its moderate expansion, supported by the highly accommodative financial conditions and stimulative fiscal measures.
• Among the main risks, we must keep a watchful eye on overseas factors. In particular, I am concerned about a possible spread of protectionist measures in trade policy.onditions and stimulative fiscal measures.
• Despite the continued improvement in economic conditions, the growth in wages and prices has been sluggish, and various factors have been pointed out as the causes.
• For Japanese firms and households, the low inflation rate has become a quite natural condition that serves as a premise for conducting economic activities.
•  In order to raise prices in a stable manner, it is necessary to encourage firms and households to change their behavior patterns by making them actually experience an inflation rate higher than 2 percent.