b. future monetary policy the bank has been enhancing easy monetary conditions through various measures, including those i have just outlined, and by also making clear its commitment to maintaining an extremely accommodative financial environment. i am certain that the synergy resulting from these measures has supported economic activity and helped clear the way to overcoming deflation by improving the aggregate supply and demand balance. as already noted, projections are always subject to uncertainties. thus, it is necessary to examine closely the forthcoming economic data and information, so that necessary policy measures can be taken swiftly and decisively should downside risks threaten before deflation has been overcome, raising the possibility that the economic outlook might deteriorate significantly. today, i have outlined some of the measures the bank has implemented over the past two years since the collapse of lehman brothers. in addition, it implemented various pioneering measures from the latter half of the 1990s to the early 2000s that are similar to those adopted by central banks in other major countries in response to recent financial crises. the selection of appropriate policy measures and enhancing of policies require that their possible effects on the economic outlook be taken into consideration, based on domestic and overseas expertise. the selection of suitable measures requires that the costs which may arise from the implementation of measures, their efficacy, potential risks, and means to prevent such risks from materializing should be considered ahead of time. it is necessary, in addition, to keep up - to - date information regarding the effectiveness, probable costs, and side effects of policy measures, since they reflect changes in the economic and financial situation, as well as fiscal and institutional structures.

roger w ferguson : monetary credibility, inflation and economic growth opening statement by mr roger w ferguson, vice chairman of the board of governors of the us federal reserve system, at the cato institute 23rd annual monetary conference on monetary institutions & economic development, washington dc, 3 november 2005. * * * by now it must be universally agreed that low and stable inflation is a primary and essential goal for monetary policy, in large part because we believe it brings stability to financial systems and fosters sustainable economic growth over the longer run. in pursuit of this goal, central banks can report some success. according to the latest world economic outlook from the international monetary fund ( imf ), consumer price inflation in the advanced economies over the decade beginning in 1997 and ending next year looks set to come in at an average annual rate of less than 2 percent, down from 31 / 2 percent for the previous ten years. the imf figures for the united states show a smaller but still substantial decline in headline inflation, from about 3 - 3 / 4 percent to 2 - 1 / 2 percent. the drop in inflation for the non - industrial economies has been more striking, with average inflation falling from double to single digits over the same time periods. 1 as someone who started work as a monetary policymaker in 1997, i am happy to acknowledge the accomplishments of many policymakers at the federal reserve and in other central banks around the world. thanks to their success in fighting inflation, the central banking profession enjoys a very high standing. and as a related matter, we might say that monetary credibility, which i would define as the perception in the private sector that central banks will do what it takes to keep inflation under control, is also quite high. this credibility is hard won, however, and can be easily lost. the federal open market committee ( fomc ) at its most recent meeting increased the federal funds rate 25 basis points, to 4 percent, and observed : the cumulative rise in energy and other costs has the potential to add to inflation pressures ; however, core inflation has been relatively low in recent months and longer - term inflation expectations remain contained... with underlying inflation expected to be contained, the committee believes that policy accommodation can be removed at a pace that is likely to be measured. nonetheless, the committee will respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability. unfortunately, however, the story over the past twenty years is not so uniformly positive for growth. again according to