Press Conference: Board Member Koeda in Kumamoto
Overview
Bank of Japan Policy Board Member Koeda held a press conference in Kumamoto City and discussed the prefectural economy, financial support after the earthquake, and monetary policy. She described the neutral interest rate as a range and said the Bank would adjust the policy rate after reviewing economic activity, prices, and financial conditions. She views underlying inflation as becoming established at around 2%, while noting that stability and sustainability must be confirmed before judging that the price stability target has been achieved.
Key points
- She described the neutral interest rate as a range and said it is difficult to specify a particular level.
- She said no pace for adjusting the policy rate had been set; decisions would be made after reviewing economic activity, prices, and financial conditions.
- The 2% price stability target is becoming established, but stability and sustainability must be confirmed before judging it achieved.
- She judged that Kumamoto Prefecture's economy, which has stalled following the earthquake, will return to a moderate recovery trend ahead.
Overview
At the meeting, representatives of Kumamoto Prefecture's government, business community, and financial sector shared views on the regional economy's current conditions and challenges, as well as the Bank of Japan's monetary policy management. Topics included the effects of the 2026 Kumamoto Earthquake on both supply and demand, semiconductor-related investment, labor shortages at small and medium-sized enterprises, and rising costs.
She explained that the Bank would adjust the policy rate while keeping in mind the estimated range for the neutral interest rate and reviewing economic activity, prices, and financial conditions. She said the neutral interest rate is fundamentally understood as a range, making it difficult to provide a pinpoint figure.
Impact
She assessed that Kumamoto Prefecture's economy has stalled under the effects of the earthquake. Looking ahead, she judged it would return to a moderate recovery trend as the downward pressure on economic activity eases and demand-boosting measures, including reconstruction and recovery demand and tourism, are expected.
Details
In the September 2026 Kumamoto Prefecture Tankan, many firms reported favorable conditions in the funding position DI and loose conditions in the financial institutions' lending attitude DI, while prefectural lending showed strong growth. She described financial conditions as remaining accommodative. Applications opened for government and prefectural financing programs and subsidies for disaster-affected businesses, while private financial institutions also provided their own frameworks and case-by-case support.
She said no specific pace of rate increases was envisaged and that each decision would follow a review of economic activity, prices, and financial conditions. She assessed that underlying inflation is around 2% and is becoming established, given broad price increases and wage growth, while noting that stability and sustainability must be discussed before the target can be judged achieved.
Equipment investment has increased in Kumamoto Prefecture following the entry of semiconductor-related companies, and construction of new factories continues. She explained that government, industry, academia, and financial institutions are working together on transport infrastructure improvements and semiconductor workforce development. She also cited comments that new company entries and capacity expansions are contributing to logistics hubs and transport infrastructure improvements.