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

of different dictatorial regimes, finland stuck to its democracy, looking to its scandinavian neighbours for models for social development. the continuity of national institutions was remarkable also during the second world war and its aftermath. in 1939 - 1944, finland lost two wars to the soviet union and had to make heavy territorial concessions in two peace treaties. however, helsinki was the only capital of a european belligerent country, apart from moscow and london, which was not occupied by a foreign army during the war. also, the finnish parliament continued to work uninterrupted throughout the war. despite of losing the war in the end, finland retained its independence, even though its room for manoeuvre in foreign policy was severely limited, especially in the years immediately after the war. the development of the finnish society in post - was decades was characterised above all by two challenges, the building of a modern, industrialized welfare state, and developing a modus vivendi with the powerful soviet neighbour. these policy goals were not independent. the building of a modern welfare state required economic growth, which had to be based on exports and integration with the other western market economies. however, the country could hardly risk getting into conflict with the communist superpower, which might, it was feared, put an end to finland's policy of economic integration with the west. finnish policy was a delicate balancing act, as if walking on a tightrope. in the end, however, finland was the only western neighbours of the soviet union to retain its democratic constitution, its multi - party democracy, the rule of law and a free market economy. these national institutions stayed intact. in a way, the miracles of the 1910 ’ s and the 1930 ’ s, the survival of the rule of law and democracy, were repeated in the late 1940 ’ s as finland managed to hold on to its democratic course, despite difficult circumstances. the value of this stability for economic development and growth cannot easily be overestimated. free trade and internationalisation another success factor for finland has been a proactive attitude towards the internationalisation of the economy. as a small country, with not very many natural resources, finland has always been dependent on foreign trade for its economic development and welfare. this fact is so obvious that it was understood quite early, and as a consequence the economic policy of the country has traditionally been export - oriented, and very eager to develop economic linkages with international markets, to the extent political realities have allowed. finland '