This process is not the so-called hollowing-out of Japan’s manufacturing base, but rather product differentiation or a more advanced division of labor across the national border. Since emerging economies are becoming more competitive and sophisticated, the only way Japan can sustain itself in the global economy is by continuing to strengthen efforts to generate products and services that are always one step ahead.
The information that has become available since our last meeting has further underpinned the reasoning behind our decision to increase interest rates in March. It has also confirmed that the medium-term outlook for price stability remains subject to upside risks, so that very close monitoring of all developments is warranted.