BOJ's Ueda Says Moderate Inflation Reviving Japan Firms' Investment

Bank of Japan Governor Kazuo Ueda said the return of moderate inflation is reviving Japanese companies’ appetite for risk and investment at home, Anadolu Agency reported, citing his remarks at the International Monetary Fund’s 2026 Michel Camdessus Central Banking Lecture on Friday.

In the lecture, titled “Japan’s Current Account Surplus and Corporate Adjustment” and published by the BOJ on November 7, Ueda said business fixed investment since the pandemic has finally surpassed its early-1990s peak, according to Anadolu.

Lending at fastest pace in three decades

Ueda said bank lending has recently been growing at more than 5 percent, the quickest pace in about 30 years, as corporate borrowing picks up, according to the speech text released by the central bank.

He pointed to a BOJ survey showing that more than 70 percent of Japanese firms reported investing more actively at home in 2023 and 2024. Addressing domestic labour shortages was the most commonly cited reason, he said.

Anadolu reported that Ueda said labour scarcity is pushing firms towards capital deepening and labour-saving automation, alongside spending on decarbonisation and digital transformation. In the speech, Ueda noted that acute labour scarcity has become a reality only in recent years.

A shift from corporate saving

The governor described Japan’s current account surplus as “remarkably persistent,” while saying the drivers behind it have changed over time. According to the speech, household saving fell as the population aged, but the corporate sector turned into large, chronic net savers from the late 1990s.

Ueda said companies during that period moved away from domestic investment towards outward foreign direct investment, with returns on that investment above 8 percent for much of the period. Japan’s primary income surplus has risen to more than 6 percent of gross domestic product, he said.

Stronger domestic investment could help Japan achieve a decades-old goal of adjustment led by domestic demand by narrowing the corporate saving surplus, Anadolu reported, citing the governor.

What’s next for inflation

Ueda said further population ageing may speed up household dissaving, while higher productivity and capital spending at home could reduce the corporate saving surplus. He added that net primary income from overseas assets will remain a lasting pillar of Japan’s external accounts for years to come, while describing the eventual outcome as an open question.

The BOJ’s next monetary policy meeting is scheduled for December 17–18, Reuters reported ahead of the lecture.

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