rates move up. why has saving been so high? historically, increased debt and rising house prices have been accompanied by a higher consumption ratio. this pattern is to be expected in particular when the driving force comes from lower interest rates : rising house prices augment house - hold wealth and together with low interest rates this points to increased house - hold consumption. the consumption ratio has been low, however, ever since 2001 despite the increased lending and higher house prices. that households both borrow and save so much and do so simultaneously may seem paradoxical. the major share of the loans is probably 3 / 5 connected with house purchases in the second - hand market. the cash flows that are generated when borrowing rises without a corresponding aggregated counterpart in the financing of new housing can be used for either consumption or financial investment. at the aggregated level it accordingly looks as though in recent years loans have gone to saving. we have seen the same development in, for example, the uk. we have no simple explanation of what underlies this. one conceivable explanation is that the stockmarket fall in 2000 and the subsequent economic slowdown stimulated prudential saving on account of labour market uncertainty and also led to increased saving by those who were directly hit by the share price fall. population groups that are approaching retirement, for example, may have increased their saving in financial assets in order to restore their wealth after the stockmarket fall. moreover, many elderly people may have chosen to move to a cheaper dwelling and thereby converted some of their real wealth into a financial asset. at the same time, households unaffected by the stockmarket fall that are younger and unconcerned about their future income may have continued to demand expensive dwellings since the interest costs have been so low. as the available statistics are mainly at an aggregated level, however, it is difficult to find evidence of the behaviour behind what we have seen. but if this interpretation holds, it is reasonable that consumption picks up when labour market uncertainty diminishes and when wealth has been restored by a combination of saving and rising asset prices. the current situation for monetary policy with that i shall move on to say something about our main scenario for economic developments in the years ahead. the international picture the outlook in the rest of the world is mainly bright. as we see it, international growth will remain high this year. conditions are also favourable for a continuation of high growth in the next few years, although we do count on a somewhat more subdued rate than last

regarding the future conduct of monetary policy and factors relevant to policy decisions, such as guidance with regard to continuation of monetary easing. through all these efforts, it becomes easier for market participants and the public to predict the future course of monetary policy and utilize such prediction in their decision - making. on the other hand, there are in fact challenges to central banks ’ communication with financial markets and the public, as uncertainties surround the economy and policy effects, particularly in the current situation where unconventional policies are taken. in the united states, since may 2013, given the prospects for economic recovery, the federal reserve had been suggesting the possibility that it might start reducing the pace of its large - scale asset purchases – known as “ tapering ”, in view of the prospect that the size of asset purchases would gradually be reduced – by end - 2013. it thus enhanced communication regarding economic conditions and economic indicators that were necessary to initiating the tapering. in response, financial markets rapidly factored in the future normalization of policy, thereby causing the surge in u. s. long - term interest rates. the federal reserve postponed the start of tapering in september, which was the timing initially considered most likely by the markets, due in part to the slow pace of recovery in employment and the deadlock caused by the fiscal debate. the federal reserve might have been aware of the risk that the greater - than - expected rise in interest rates would actually impair the economic recovery. long - term interest rates edged down thereafter but have been at a level of around 1 percentage point higher than that seen before may. for details of the analysis and the result, see ryuzo miyao, “ central banking further into uncharted territory ”, speech at the foreign correspondents ’ club of japan, bank of japan, may 28, 2013. bis central bankers ’ speeches a series of events the federal reserve has experienced seems to be instructive for the bank of japan for the future. the bank will continue to aim at making better communication to the public. concluding remarks : the economy of nagano prefecture my concluding remarks will touch on the economy of nagano prefecture. the postwar development of the economy of nagano prefecture has been supported mainly by manufacturing, such as of electric machinery, general machinery, and transportation equipment. however, because this is a manufacturing - oriented economy, it had been experiencing a relatively large adverse impact from the lehman shock and the yen ’ s appreciation in recent years. as for nonmanufacturing