time employee for fy 2018 is the april - july average. that for base pay increase for fy 2018 is as of july 6, 2018. sources : ministry of health, labour and welfare ; central labour relations commission ; japanese trade union confederation ( rengo ) ; bank of japan. chart 7 quantitative and qualitative monetary easing with yield curve control yield curve control % 1. 2 recent jgb yield curve 1. 0 0. 8 target level of the long - term interest rate : around zero percent 0. 6 0. 4 short - term policy interest rate : minus 0. 1 percent 0. 2 0. 0 - 0. 2 - 0. 4 residual maturity, year source : bloomberg. chart 8 strengthening the framework for continuous powerful monetary easing taking more time than expected to achieve the price stability target of 2 percent. maintaining the output gap as long as possible within positive territory is appropriate. persistently continuing with powerful monetary easing forward guidance for policy rates " the bank intends to maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in october 2019. " ⇒ strengthening the commitment to achieving the price stability target enhancing the sustainability of " quantitative and qualitative monetary easing ( qqe ) with yield curve control " long - term interest rate : the bank maintains the target level of around zero percent. while doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices. purchases of etfs : the bank maintains the annual pace of increase in the amount outstanding of about 6 trillion yen. while doing so, the bank may increase or decrease the amount of purchases depending on market conditions. etc. achieving the price stability target of 2 percent at the earliest possible time while securing stability in economic and financial conditions. chart 9 jgb market transaction volume for jgbs bond market survey degree of bond market functioning ( change from three months ago ) 1. 2 tril. yen / day introduction of yield curve control strengthening the framework for continuous powerful monetary easing 1. 0 di ( " has improved " - " has decreased " ), % points - 10 0. 8 - 20 0. 6 - 30 improve - 40 0. 4 - 50 - 60 0. 2 - 70 0. 0 - 80 jan. july jan. july jan. july jan. july feb. aug.

times. so the bar for change is high. where we were in 2011 in the run - up to the 2011 renewal, the bank focused its research on three questions : whether to adopt a lower inflation target ; whether to move to price - level targeting ; and how monetary policy should take account of financial stability considerations. these questions were not new. but the global financial crisis cast them in a different light. bis central bankers ’ speeches let me outline where the bank came out on each of these three questions in order to give you some context for the discussion that follows about our current research. 1 should we target a lower rate of inflation? canada, like most other inflation - targeting central banks in advanced economies, has been aiming at an inflation target of 2 per cent. why 2 per cent? we know that high and variable inflation is costly. it erodes purchasing power, creates uncertainty, distorts relative prices and investment decisions, and causes arbitrary redistributions of wealth between savers and borrowers. so the inflation target should be low enough to minimize these distortionary effects. at the same time, there are risks associated with very low rates of inflation, the most important being the zero lower bound ( zlb ) on interest rates. the lower the inflation target, the lower the average nominal policy interest rate will be. therefore, the greater the likelihood that adverse shocks will push interest rates to the zlb and hence limit the central bank ’ s ability to respond with conventional policy. a positive inflation rate also helps to “ grease the wheels, ” since it is less likely that the economy will be constrained by downward nominal wage rigidity. 2 another argument for a slightly positive inflation target is that official price statistics are subject to measurement bias, in effect, overstating true inflation. 3 would there be net benefits to targeting an inflation rate lower than 2 per cent? a lower target is intuitively appealing, since even with 2 per cent inflation, the price level doubles every 35 years. a lower target could further reduce distortions stemming from incomplete indexation of nominal contracts and the tax system, and the disincentives for holding money. the bank ’ s research leading up to the 2011 renewal strengthened the case for lowering the target. however, our research and the experience of the crisis also highlighted the sizeable risks associated with the zlb. while unconventional monetary policy ( ump ) instruments, such as asset purchases and forward guidance, appeared to provide stimulus, their benefits and costs would only be known