”, summary of a speech given by toshihiko fukui, governor of the bank of japan, to the japan chamber of commerce and industry in tokyo on 16 march 2006. woodford m. “ for not only do expectations about policy matter, but ( … ) very little else matters. ” – interest and prices : foundations of a theory of monetary policy, princeton university press, 2003. been followed recently by the norgesbank 21. at first ( since 2003 ) the norwegian mpc published its monetary policy intentions only for the next four months in the form of an interest rate forecast interval. last november it went further and started publishing a forecast for interest rates three years ahead in the form of a central forecast ( with two alternative scenarios ) along with a fanchart ). these bold steps made new zealanders and norwegians push the frontier of central banking ahead and set a new benchmark for inflation targeters 22. are we ready to follow? in 2000 mahadeva and sterne measured central banks transparency 23. back then the polish central bank was below the average among inflation targeters. however since then the nbp has made considerable progress. major changes to communication have been introduced such as publication of inflation forecasts, modification of inflation reports and decision statements in order to make them more forward - looking. łyziak et al. have applied the mahadeva - sterne and eijffinger – geraats indices to assess current transparency of the nbp and showed that it has markedly improved 24. nevertheless, we are not resting complacently. there are still ways to go and things to learn. later today marek rozkrut will present results of an empirical study conducted at the nbp 25 showing that central bank communication strategies in the czech republic, hungary and poland exhibit large differences. the czech national bank seems to do a much better job than the other two banks in matching words with deeds. there is also some evidence that pursuance of too many targets under it framework leads to inconsistencies also in central bank communication, as in the case of the hungarian national bank. finally, to those of you, who intend to adopt it in the future let me say one last thing. a standard view is that it should not be introduced unless a number of criteria are fulfilled. as piotr szpunar will tell you in the first presentation, at the time poland adopted it one could claim we were not ready

. although i believe i have offered plausible explanations for the acceleration of inflation this spring and summer and reasonable rationales for expecting inflation to moderate, i would feel much more confident about where we are heading if i had a more accurate bearing on the direction from whence we have come. in addition, in my view, if inflation failed to abate it could impose considerable costs on economic performance over time, a concern that brings me to the topic of monetary policy. monetary policy even if my relatively favorable forecast comes true, the level of short - term interest rates that will produce this forecast remains uncertain. obviously, as my fomc voting record indicates, i believe that, for now, the current level of short - term rates has the best chance of fostering this outcome. looking ahead, policy adjustments will depend on the implications of incoming data for the projected paths of economic activity and inflation. i must admit i am surprised at how little market participants seem to share my sense that the uncertainties around these paths and their implications for the stance of policy are fairly sizable at this point, judging by the very low level of implied volatilities in the interest rate markets. as i have outlined tonight, i think that the risks to my outlook for economic activity may be skewed a bit to the downside, while those to my forecast of gradually declining inflation are tilted to the upside. in my view, in the current circumstances, the upside risks to inflation are of greater concern. although to date inflation expectations have remained contained, failure to check and then reverse the greater inflation pressures of earlier this year would risk embedding those higher inflation rates in the decisions of households and businesses, an outcome that would be costly to reverse and would impinge on the economy's long - term performance.