should pay close attention to the risk of prolonging the period of accommodative financial conditions, which may lead to swings in economic activity and prices in the future, as the recent experience of the world economy suggests. in conducting monetary policy, the bank will continue to carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement its policies in an accordingly flexible manner. moreover, since global financial markets are expected to remain strained for some time and there are various uncertainties in the outlook for economic activity and prices, it is essential for the bank to maintain market stability. the world's economies now face serious challenges. the japanese economy is no exception. uncertainties remain elevated both in financial markets, real economic activity, and inflation. to deal with these challenges, we believe it is important to explain carefully how we assess economic conditions and how we conduct monetary policy. to this end, we, the policy makers, must be good communicators. providing necessary information appropriately will enhance the credibility of our policy - making. also, as globalization proceeds, it has become increasingly important to communicate internationally. i think these thoughts can be shared with people like you who are professionals in the field of communication. in closing, before i leave you i would like to express our strong commitment to make appropriate economic assessments and policy decisions, and to explain them to the public appropriately in a timely manner. thank you very much for your kind attention.

negative effects on other domestic industries through the input - output relationship, although it reduced imports of materials. the diversification of demand and supply sources just described led to asynchronicity in production activity and resulted in canceling - out of small shocks in sectoral demand and supply, leading to a stable growth pattern. however, this also meant that we did not have a strong engine of growth affecting all sectors, and thus the speed of economic expansion was moderate. in fact, the recovery since 2002 has been led mostly by the corporate sector, for details of this assessment, see kiyohiko g. nishimura, " increased diversity and deepened uncertainty : policy challenges in a zero - inflation economy, " international finance 10 : 3 ( 2007 ), 281 - 300, which is based on my speech at the brookings institution in july ( http : / / www. boj. or. jp / en / type / press / koen07 / ko0707a. htm ). especially exporting firms. corporate profits exceeded their previous peak and corporate fixed investment increased steadily. however, since growth was at best moderate, firms remained cautious in increasing their labor force and production capacity, and maintained their restrictive stance on wage increases. although this cautiousness apparently has prevented firms from accumulating excess production capacity and excess labor so far, it has resulted in sluggish wage increases and ultimately, in a lackluster state of consumption. the current state of the japanese economy in this way, the japanese economy enjoyed not so strong, but stable and resilient, economic growth until the end of last year. since then, however, the growth rate has slowed. first, there was the shock caused by a stringent revision of the building standard law, resulting in a fall in housing and construction investment. then came a sharp increase in energy and materials prices, which has caused a substantial transfer of income from japan to oil and materials exporting countries. this decrease in real income had an adverse effect on both private consumption and corporate fixed investment. the decrease in corporate fixed investment has been noticeable especially among small and medium - sized enterprises that rely mostly on domestic demand and therefore do not benefit from strong increases in exports. recently, exports have lost their momentum, reflecting the gradual slowdown of the world economy. the turmoil in the u. s. financial markets, which stemmed from the u. s. subprime mortgage problem, has affected economic activities in the u.