Today, I would like to make some remarks on the Bank's view of Japan's recent economic and financial developments and on the thinking behind our recent conduct of monetary policy. I. Developments in Japan’s Economy  Japan's economy continued to deteriorate throughout 2001 and into early 2002, reflecting the rapid deceleration of the world economy due to adjustment in IT-related industries.
True, the specialization and efficiencies resulting from expanding trade enlarge potential supply by increasing productivity, enabling an increase in actual consumption and investment. But, so far, the evidence does not suggest that they have materially raised or lowered the extent of resource utilization associated with the economy producing at its sustainable potential.