In my remarks today, I will present the Bank's view regarding recent economic and financial developments, and explain our thinking on the conduct of monetary policy. The current state of Japan's economy and the outlook Japan's economy continues to recover, having emerged from the temporary pause that began in the second half of 2004.
Provided that growth expectations affect both the supply and demand sides, there could be cases where an adverse impact on demand may be stronger than one on supply – for example, in the case of a permanent negative shock on productivity (Saito et al. [2010]).