the euro, it seems legitimate to take initial stock : as regards domestic price stability, i. e. the movement of the inflation rate, the history of the euro has so far been a “ success story ”. the rise in the harmonized consumer price index, currently at 1. 2 %, is still a good way off the absolute limit of “ less than 2 % ” set by the governing council. even so, increased vigilance is needed here since a certain upward pressure on consumer prices has to be expected, not least on account of the steep rise in oil prices. for this reason the governing council of the ecb decided at its meeting on 4 november 1999 to raise the ecb ’ s three main interest rates by 50 basis points each. the governing council is convinced that the timely rise in interest rates will avoid the need for stronger measures later ; on balance the prospects for sustained price stability remain good. [ figure 6 ] – not available “ there is no light without shadows ”, says a german proverb, and that brings me to a topic which has been much discussed among the public at large, namely the movement of the external value of the euro : the expectations about the positioning of the euro in the global financial markets were very mixed. “ euro over - optimists ” had reckoned with a rapid appreciation of the euro against the us dollar because they were expecting central banks, institutional investors and private investors to take early and marked advantage of the euro in order to diversify their portfolios, which often focused on the dollar. by contrast, “ euro sceptics ” drew attention to the fact that it needs a long time before a new and untried currency is accepted as an investment, reserve and transaction currency. as a matter of fact, the euro made a promising start in the foreign exchange markets, with a rate against the dollar of 1. 18. but the exchange rate soon began to edge down, reaching an all - time low, at 1. 0124, on 12 july. the main reasons for this depreciation were no doubt the astonishing resilience of us business activity and the associated distinct interest - rate advantage of the united states. in the meantime, the reference rate of the euro against the dollar has picked up distinctly, and for some time past has been moving within a range of 1. 03 – 1. 09 ( on... the current level is... ). this upward movement is undoubtedly due to the improved economic

year rate of increase in the core cpi, excluding the effects of the consumption tax hike, has continued to be stable at around 1¼ percent. in re - anchoring medium - to long - term inflation expectations, it is conceivable that people revise their expectations not only in a backward - looking manner based on the rise in short - term inflation expectations, but also in a forward - looking manner considering, for example, developments in wage revision. in that regard, the result of wage revision this year marked an important step toward a breakthrough in changing people ’ s pessimistic expectations that base salaries will not rise under deflation. regarding wage negotiations next year, three - way discussions among the government, employers, and labor unions are taking place under the government ’ s initiatives. i expect that they will lead to actual wage increases and exert a positive effect on the formation of people ’ s inflation expectations, thereby having favorable effects on medium - to long - term inflation expectations. to be sure, the time frame for continuing qqe is based on the idea of forecast targeting – namely, as long as it is necessary for maintaining the target in a stable manner. the price stability target is expressed in terms of the year - on - year rate of increase in the cpi for all items. considering the aim behind this, i think it will remain important to focus on the formation of people ’ s inflation expectations – as i have mentioned earlier – and to carefully examine future developments in a wide range of price indicators including those relating to wages. it should be noted that there is no silver bullet for estimating people ’ s medium - to long - term inflation expectations on a real - time basis, and therefore the necessity of continuing qqe should be judged by the bank ’ s policy board at each mpm. thank you. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches references bank for international settlements, committee on the global financial system, “ macroprudential instruments and frameworks : a stocktaking of issues and experiences, ” cgfs papers no. 38, 2010. — —, committee on the global financial system, “ operationalising the selection and application of macroprudential instruments, ” cgfs papers no. 48, 2012. bank of japan, financial system report, october 2014. — —, “ the bank of japan ’ s initiatives on the macroprudential front