to grow by 2. 0 % in 2005 according to the fund's world economic outlook ( weo ). this is not as spectacular as the united states, which grew by 4. 2 % in 2004 and whose weo growth forecast is 3. 5 % for 2005. nevertheless, it is a respectable growth path compared to some other mature industrialized economies. i believe that this moderate growth trend can be sustained for some time. what does this mean for monetary policy? the bank of japan is maintaining the policy framework of quantitative easing. as you know, under this framework, the bank supplies liquidity far in excess of required reserves, creating an environment where short - term interest rates stay very close to zero. another element of our present policy framework is a firm commitment to maintaining that environment until year - on - year inflation, as measured by core cpi, is stably zero or above. 5 / 6 currently, japanese core cpi is still declining slightly, and the bank of japan steadfastly adheres to the commitment i have just explained. by doing so, we are supporting the japanese economy's return to a stable and sustainable path of growth. thank you for your attention. it has been a pleasure speaking to you. 6 / 6

. except for the period after the previous consumption tax hike in 1997 and the surge in global commodity prices around 2008, this is the first time since 1993 that the cpi has risen by more than 1. 0 percent yearon - year several months in a row. with firms and households experiencing these price increases, their inflation expectations are changing in an adaptive manner. in this situation, medium - to long - term inflation expectations are likely to follow an increasing trend and gradually converge to around 2 percent – the price stability target. these developments seem to have started to influence actual wage and price settings. as mentioned earlier, an increasing number of firms are raising base wages and some firms recently have changed from a strategy that puts first priority on low prices to one that aims at raising sales prices while increasing value - added. regarding the cpi for april, an issue of key interest has been whether firms have been able to pass on the consumption tax hike by raising sales prices in line with the tax hike, and the index for tokyo, which is released ahead of the nationwide index, suggests that this is indeed the case. bis central bankers ’ speeches the phillips curve let me summarize this price rise mechanism in terms of the phillips curve, which illustrates the relationship between the output gap and inflation. this relationship is shown in chart 8, with the red dots representing the four positions observed over the past year. while it is difficult to gauge the shape and position of the phillips curve on a real - time basis, we find that the red dots lie above the phillips curve based on observations for the past 18 years. thus, taking into account the aforementioned rises in various indicators of inflation expectations and changes in wage - and price - setting behavior, the chart suggests that two things appear to have happened : we seem to have moved upward along the phillips curve, reflecting a boost in inflation due to the improvement in the output gap, and the phillips curve appears to have shifted upward due to a rise in inflation expectations. it is likely that these developments will continue and the inflation rate will follow a path toward achieving the price stability target of 2 percent. iv. monetary policy management and the growth potential of japan ’ s economy as i have mentioned, qqe has been having the intended effects. therefore, i believe it is important to continue with qqe as long as it is necessary for maintaining the price stability target of 2 percent in a stable manner. on that basis, should the outlook change due to certain risk factors the bank, if