time employee for fy 2018 is the april - july average. that for base pay increase for fy 2018 is as of july 6, 2018. sources : ministry of health, labour and welfare ; central labour relations commission ; japanese trade union confederation ( rengo ) ; bank of japan. chart 7 quantitative and qualitative monetary easing with yield curve control yield curve control % 1. 2 recent jgb yield curve 1. 0 0. 8 target level of the long - term interest rate : around zero percent 0. 6 0. 4 short - term policy interest rate : minus 0. 1 percent 0. 2 0. 0 - 0. 2 - 0. 4 residual maturity, year source : bloomberg. chart 8 strengthening the framework for continuous powerful monetary easing taking more time than expected to achieve the price stability target of 2 percent. maintaining the output gap as long as possible within positive territory is appropriate. persistently continuing with powerful monetary easing forward guidance for policy rates " the bank intends to maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in october 2019. " ⇒ strengthening the commitment to achieving the price stability target enhancing the sustainability of " quantitative and qualitative monetary easing ( qqe ) with yield curve control " long - term interest rate : the bank maintains the target level of around zero percent. while doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices. purchases of etfs : the bank maintains the annual pace of increase in the amount outstanding of about 6 trillion yen. while doing so, the bank may increase or decrease the amount of purchases depending on market conditions. etc. achieving the price stability target of 2 percent at the earliest possible time while securing stability in economic and financial conditions. chart 9 jgb market transaction volume for jgbs bond market survey degree of bond market functioning ( change from three months ago ) 1. 2 tril. yen / day introduction of yield curve control strengthening the framework for continuous powerful monetary easing 1. 0 di ( " has improved " - " has decreased " ), % points - 10 0. 8 - 20 0. 6 - 30 improve - 40 0. 4 - 50 - 60 0. 2 - 70 0. 0 - 80 jan. july jan. july jan. july jan. july feb. aug.

follows a path of sustainable growth under price stability. in the second perspective, we identify the potential risks beyond the forecast period. for instance, excessive investment induced by sustained expansionary monetary policy may give rise to undesirable wide fluctuations of economic activity. the second perspective is designed to cope with the situation where the probability of the event is low, yet the damage to the economy could be quite large if it materializes. this second perspective corresponds to the risk management approach to monetary policy of greenspan or the “ mini - max approach to monetary policy management under knightian uncertainty ”. we have observed the upward revision of the potential growth rate under the circumstances of low real long - term interest rates on the global market. recent developments in monetary aggregates suggest a return to the equilibrium trend, after the sustained upward deviation from the equilibrium trend under the zero interest rate and the quantitative easing policy. given the lessons from the second episode, we should cautiously watch the developments in money and credit, and examine the policy implications of changes in monetary and credit aggregates, as the role of money is more subtle and far - reaching as suggested by the option - like value of currency holdings and liquidity effect under the quantitative easing policy. references [ 1 ] black, f. ( 1995 ) “ interest rates as options, ” journal of finance, 50. [ 2 ] bank of japan ( 1975 ) “ on the importance of money supply in japan ” ( in japanese ), bank of japan research papers, july 1975. [ 3 ] bank of japan ( 2003 ) “ the role of the money stock in conducting monetary policy, ” bank of japan quarterly bulletin, may 2003. [ 4 ] christiano, l., and fujiwara, i. ( 2006 ) “ bubble, excess investment, shorter work hours and the lost decade ” ( in japanese ), bank of japan working paper series, no. 06 - j - 08. [ 5 ] friedman, m. ( 1985 ) “ monetarist in rhetoric and in practice, ” in monetary policy in our times, eds. ando, a., eguchi, e., farmer, r., and suzuki, y., mit press. iwamura, shiratsuka and watanabe ( 2006 ) argued that this fact is difficult to explain in the absence of differentiated liquidity services provided by money and government bonds. yet, there arises a further question as to why money can provide liquidity services superior to bonds. the technological function