the effective lower bound, monetary policy toolkits have become highly diversified. the past fifty years have brought not only new challenges but also new opportunities. society has become increasingly and widely digitalized. in addition to the advances in the use of alternative data and improvements in computing power, large - scale language models are rapidly developing. there has also been a rapid expansion in the type and amount of information and in the information technology and communication channels available to central bankers. they are all new opportunities for monetary policy. 1 / 4 bis - central bankers'speeches here, i will review the discussion about the great inflation and give an overview of the new challenges and new opportunities. ii. lessons from the great inflation in the 1970s, and new challenges lessons from the great inflation in the 1970s first, i would like to touch upon two lessons learned from the great inflation in the 1970s. one is the importance of identifying the causes of inflation. the great inflation occurred during a period that included two oil crises, and its causes are sometimes associated with cost - push factors. however, there are strong arguments that for some countries, including japan and the united states, accommodative monetary policy and the subsequent excess increase in demand played a major role. whether inflation is caused by demand or supply has very important implications for monetary policy making. theoretically, in response to demand - driven inflation, policy tightening is desirable to reduce excess demand and contain inflation. in response to supply - driven inflation, central banks'decision making faces the difficult dilemma between considerations of economic activity and the need to tackle surging inflation. taking the current increase in global inflationary pressure as an example, it has been pointed out that the increase in inflationary pressure has been caused by supply factors such as a rapid rise in commodity prices, labor shortages, and disruptions to supply chains. it may have been influenced also by demand factors, including the effects of expansionary fiscal and monetary policy measures and the pent - up demand after the spread of pandemic. in addition, the impact of these factors may appear with some lags. identifying the factors in real time is an even more difficult task. in light of these points, it is extremely important to carefully analyze various indicators and examine the underlying trend in prices. the other lesson from the great inflation is the importance of stabilizing inflation expectations. there are studies that point out that sudden and significant rises in inflation expectations occurred at the outset of the great inflation period. in theory, of course

as limited experience and data constraints in measuring their effectiveness, and further theory building and testing will be required. as a result of increases in the variety of toolkits and also advances in monetary policy making, central banks need to be more careful about how they communicate. these points are related to the recent decision of the bank of japan made at the end of april to conduct a review of its monetary policy from a broad perspective. since the late 1990s, when japan's economy fell into deflation, the bank has implemented various monetary easing measures. we will review the interaction between these measures and economic activity, prices, and financial conditions, and the positive effects and the side effects, drawing on the knowledge in japan and abroad. iii. new opportunities finally, i would like to talk about new opportunities. in recent years, both academics and policy makers have benefitted greatly from digitalization. they have exploited new types of data in their analyses, including highly granular data at the level of individual firms, households, and persons ; daily and intraday high - frequency data ; people flow data ; and text data. improvements in computational power have made the analysis of such data far easier and more advanced than before. these examples of new opportunities played a particularly large role in understanding economic conditions at the outbreak of the pandemic, for instance. in the rapidly changing economic conditions brought about by the spread of the virus, it became necessary for policymakers to observe the economic activities of firms and individuals on a weekly or daily basis. the bank of japan was no exception. for example, the bank used high frequency data such as consumption developments based on credit card payment data and nighttime population of downtown tokyo based on smartphone location data. iv. conclusion 3 / 4 bis - central bankers'speeches we are now about to start the 28th boj - imes conference. this year's mayekawa lecture will be given by professor maurice obstfeld of university of california, berkeley. professor obstfeld served as honorary adviser to the imes from 2001 to 2014 and has participated in boj - imes conferences 12 times. i have had the pleasure of participating with him in nine of them. i am looking forward to his lecture based on his experience as an academic, policy maker, and old friend of the bank of japan. in the keynote speech, professor athanasios orphanides of mit, one of our honorary advisers, will share his views on the policy communication aspect of monetary policy strategy, in