are staff estimates and exclude the effects of the consumption tax rate hikes, and others. 2 % with a median of 1 % was consistent with its understanding of price stability before clarifying further by confirming in december 2009 that the range did not include negative values, and the boj finally introduced the price stability target of 2 % in january 2013. with hindsight, the introduction of a clear inflation target could have influenced the discussion before the boj's decision to terminate the zero - interest policy in august 2000. at that time, core inflation was still - 0. 5 percent, while forward guidance on the short rate introduced in april 1999 stated that the bank would continue the zero rate until deflationary concerns were dispelled. although it is difficult to attribute the subsequent deflation solely to the minor rate increase, the termination may have weakened the efficacy of the forward guidance. another aspect worth considering is the timing of asset purchases. the boj's active acquisition of long - term jgbs happened relatively late compared with the observed inflation dynamics ( chart 1 ). while the boj began buying more long - term jgbs with the onset of quantitative easing in march 2001, there was no significant increase in its holdings of jgbs until 2013, as shown in chart 3. by contrast, the fed's holdings of us treasury securities began to rise sharply in early 2009, in response to the global financial crisis. having said that, it should be noted that, as shown in chart 4, the 10 - year jgb yield was already below 2 % in the late 1990s, while the 10 - year treasury yield was close to 4 % when the fed initiated its large asset purchases. this prompts the question of how much impact larger - scale jgb purchases would have had in the early 2000s. the zero - inflation trap and the entrenched nature of low inflation expectations let me now turn to a second possible explanation for the boj ’ s difficulties. i think the entrenched nature of low inflation expectations played a key role ; it led to changes in economic agents'behavior, especially the strategic pricing behavior of firms, and, in turn, prolonged the period of the zero - inflation trap. as my colleagues will elaborate later, when firms do not think their peers will raise prices, they think it is best to keep their prices ( and wages ) unchanged, even in the face of small changes in costs or demand, making overall inflation or inflation expectations more entrenched

that determine the trend change in prices. as a measure to prompt an improvement in the aggregate supply and demand balance, in terms of interest rates, the bank has kept the policy rate at the effectively zero level. to encourage a further decline in longer - term interest rates in the money market, the bank introduced in december 2009 a new funds - supplying operation, through which funds with a maturity of three months are provided at an extremely low interest rate of 0. 1 percent, and the total amount of loans to be provided through this operation was set at approximately 10 trillion yen. the total amount of loans was increased to 20 trillion yen in march 2010. in terms of funds provision, the bank has been providing ample funds through various fundssupplying operations, including the new operation. furthermore, the bank has made its stance clear that it will consistently maintain the extremely accommodative financial environment. as for inflation expectations, the other determinant of prices, the bank has, to prevent people ’ s expectations for prices from declining, clearly showed its stance, in the form of the “ understanding of medium - to long - term price stability, ” that it is critical to achieve a positive year - on - year rate of changes in the cpi. to overcome deflation and achieve a sustainable economic growth with price stability, the bank will continue to consistently make contributions as central bank.