that of economic growth because of the worsening of the terms of trade. 2. in the labor market, the trend of improvement will be maintained with a private - sectorled increase in the number of persons employed and a fall in the unemployment rate. having said that, the degree of improvement in qualitative terms will be checked somewhat by the feebleness of large businesses in the creation of what are seen as “ decent jobs ” 9. 3. consumer prices are expected to stay on a rising track for quite some time, carrying over from the 3 1 / 2 % level for this quarter. even as the number of persons employed in the private sector increased by a total of 382, 000 running up to october of this year, that of large corporations decreased by 49, 000. demand pressures are being built up from the sustained rise in economic activity and international commodity prices, wages and rental charges are all on the rise. the accelerated upward trend of chinese wages and prices may also act as a cost push factor for domestic prices by way of higher import prices. expected inflation, which has been on the rise since the beginning of this year, will affect prices after some time lag. 4. the current account will retain its underlying surplus but the scale of this surplus is seen to shrink owing to the expansion of imports drawn in by the strengthened recovery momentum of domestic demand. the ratio of the current account surplus to gdp will drop from this year ’ s 3 % level to below 2. 0 % but above 1. 5 % in 2011. 5. these economic forecasts for 2011 are attended by a considerable degree of uncertainty. domestically, there are the geopolitical risks following the north korean attack on yeonpyeongdo. externally, the unknowns include the sovereign debt problems of the euro area, price instability in china, and the direction of the us fed ’ s monetary policy post - qe2. policy tasks 1. while the korean economy will stay on a solid growth track in 2011, political initiatives should be directed toward raising the living conditions of the public at large including the boosting of purchasing power by way of price stability and the creation of “ decent jobs ”, given the persistent gap between public perceptions of the level of economic activity and the actual numbers. 2. great care must be taken to avoid an enfeebling influence on the domestic financial and foreign exchange markets and on real economic activity from the eurozone debt problems, chinese inflation and the fed ’ s monetary

to bid for more federal funds while selling treasury securities or other assets. interest rates will adjust up until banks are indifferent with regard to holding the relatively smaller volume of reserves available in the banking system. overall, policymakers will be monitoring to make sure that the level of reserves the fed supplies to the banking sector, which influences the composition of assets and liabilities on banks ’ balance sheets as well as market interest rates, provides the desired stance of monetary policy to achieve the fomc ’ s dual mandate of maximum employment and stable prices. of course, we will need to be very careful to understand the precise factors that underlie any significant movements in these areas, because factors that are unrelated to the fed ’ s balance sheet policies might also cause such adjustments. conclusion to conclude, i would like to reemphasize that i have touched on some highly uncertain issues today — issues that, i would like to stress again, have not been decided by the fomc. one such issue that closely relates to my remarks today, and one i believe the upcoming panel will likely address, is which policy implementation framework the fed should use in the long run. that is, broadly speaking, should the fed continue to use an operational framework that is characterized by having relatively abundant reserves and operate in what is termed a “ floor regime, ” or should it use one in which the supply of reserves is managed so that it is much closer to banks ’ underlying demand for reserves as in a “ corridor regime "? of course, a host of complex issues underlie this decision, so i would just like to emphasize two general points. first, a wide range of quantities of reserve balances — and thus overall sizes of the fed ’ s balance sheet — could be consistent with either type of framework. second, while u. s. liquidity regulations likely influence banks ’ demand for reserves, the fed is not constrained by such regulations in deciding its operational framework, because u. s. banks will be readily able to meet their regulatory liquidity requirements using the range of available high - quality liquid assets, of which reserve balances is one type. importantly, additional experience with the federal reserve ’ s policy of gradually reducing its balance sheet will help inform policymakers ’ future deliberations regarding issues related to the long - run size of the fed ’ s balance sheet, issues that will not need to be decided for some time. the final and most general point is simply to underscore the premise with which i began