. see balassa, 1964, and samuelson, 1964. see rodriguez - palenzuela, camba - mendez and garcia, 2003. see ecb, 2003a and 2003b. complementary perspectives : an economic and a monetary analysis. these have become known as the two pillars of the ecb ’ s strategy. the economic analysis focuses mainly on the assessment of current economic and financial developments from the perspective of the interplay between supply and demand in the goods, services and factor markets. in this respect, the macroeconomic projections serve to structure and synthesise a large amount of economic data. nevertheless, these cannot be regarded as an all - encompassing tool for the conduct of monetary policy. i will elaborate on this issue in a moment. the monetary analysis serves as a means of cross - checking, from a medium to long - term perspective, the short to medium - term indications arising from the economic analysis. in october 1998 the governing council assigned a prominent role to money in recognition of the fact that, in the medium to long run, monetary growth and inflation are closely related. this provides the governing council with key information at time horizons stretching beyond those usually adopted for the construction of central bank inflation projections. the prominent role assigned to money in the ecb ’ s strategy is signalled by the announcement of a reference value for monetary growth. however, the monetary analysis seeks to provide a comprehensive survey of the liquidity situation, thereby going far beyond an assessment of monetary growth in relation to the reference value. in 1998 the ecb also discussed a strategy of direct inflation targeting as a particularly relevant option. in its strategy review the governing council again looked closely at the arguments. in the last two decades many countries have moved to a stability - oriented monetary policy framework. as a result, central banks have made a credible commitment to targeting low and stable inflation rates. in this context, a number of central banks have chosen a strategy of inflation targeting. essentially, this encompasses the following : ( 1 ) price stability as the primary objective ; ( 2 ) the public announcement of an inflation rate to be maintained over a more or less precisely defined time horizon ; ( 3 ) transparency of the monetary policy strategy through appropriate communication with the markets and the public on monetary policy decisions ; and ( 4 ) greater accountability on the part of the central bank as regards the fulfilment of its mandate. in retrospect, the policies pursued within this framework have been a great success in terms of achieving price stability.

concerning risks to the outlook, there have been extremely high uncertainties for japan's economy, including the following : developments in overseas economic activity and prices ; developments in the situation surrounding ukraine and in commodity prices ; and the course of covid - 19 at home and abroad and its impact. in this situation, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on japan's economic activity and prices. meanwhile, japan's financial system has maintained stability on the whole. although attention is warranted on, for example, the impact of the tightening of global financial conditions, the financial system is likely to remain highly robust on the whole, mainly because financial institutions have sufficient capital bases. regarding financial risks from a longer - term perspective, while there is a possibility that prolonged downward pressure on financial institutions'profits may lead to a gradual pullback in financial intermediation, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. japan's economy is on its way to recovery from a downturn caused by covid - 19 and uncertainties for the economy have been extremely high. on the price front, the year - onyear rate of increase in the cpi is projected to decelerate to a level below 2 percent from fiscal 2023. given such developments in economic activity and prices, the bank will continue with monetary easing, aiming to firmly support japan's economy and thereby achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. thank you. 2 / 2 bis - central bankers'speeches