##s, and real interest rates. from the chart, we can see that inflation expectations in terms of the bei rate started to rise following the introduction of qqe. this will reduce real interest rates, leading to a rise in asset prices, a decrease in the yen ’ s exchange rate, and an expansion in employment and production through an increase in business fixed investment and consumption of durable goods, and consequently economic recovery. iv. my views on criticisms against qqe as i have explained, qqe has somehow managed to support economic recovery. there is a theoretical basis for this, but even so, criticism against this policy has not subsided. let me first introduce a general criticism. many people do not feel that the economy is recovering. indeed, only about 10 percent of respondents answered that economic conditions have improved in the bank ’ s survey. chart 10 shows the trend in responses to the question : “ how do you think economic conditions have changed compared with one year ago? ” here, 10 percent is by no means low. even at its peak before the lehman shock, the ratio was only at around 20 percent. considering the effects of the consumption tax hike in fiscal 2014, it will take time before people begin to feel more strongly that economic conditions are improving. criticisms against monetary policy are as follows. exports have not grown even after the introduction of qqe. it is true that exports had been sluggish at the time of the introduction. however, this was due to the shift of japanese firms ’ production sites to overseas that was brought about by the fact that no measures were taken to deal with the appreciation of the yen after the lehman shock. even though the yen has depreciated, it takes time to shift production sites back to japan. if a monetary easing policy like the one that is now in place had been adopted immediately following the lehman shock, i think that this situation could have been avoided. meanwhile, revenue from inbound tourism, which is part of service exports, has grown by a considerable degree. such revenue, which was 1. 2 trillion yen in 2012, rose to 1. 5 trillion yen in 2013 and nearly 2. 0 trillion yen in 2014, and already has exceeded 2. 0 trillion yen in the january - august period of 2015. it takes time to shift production sites back to japan, but tourism is apparently an industry that can respond quickly. however, it is necessary to make additional investment, such as in hotels, in order to continue attracting

forward guidance, which expects to influence longer - term interest rates by committing to continuing monetary easing as long as necessary and thereby bringing forward future demand. thus, it is not appropriate to categorize the bank ’ s current monetary policy as “ traditional ” forward guidance, as currently implemented by other central banks such as the federal reserve and the ecb ( chart 16 ). in addition, forward guidance entails the dynamic inconsistency problem ( or time inconsistency problem ) – that is, even if a central bank commits to continuing the policy as long as necessary, this commitment might be broken at some point. the notable example is that global financial markets became unstable after chairman bernanke of the federal reserve indicated a specific schedule for reducing the pace of its asset purchases in late may 2013. in this regard, other major central banks that adopt unconventional monetary policies are facing new challenges as to how to ensure the effectiveness of their forward guidance. that is to say, these central banks will keep trying to determine what kind of commitment is needed to make the public and market participants believe that such commitment will be fulfilled. d. toward accumulating the monetary base the bank has disclosed its monetary base target and balance sheet projections up until the end of 2014 as part of its efforts to achieve the price stability target with a time horizon of about two years. according to the projections, the expected amounts outstanding of the monetary base and japanese government bonds ( jgbs ) at the end of 2014 are around 270 trillion yen and around 190 trillion yen, respectively. the amounts outstanding of both the monetary base and jgbs have been accumulated almost in line with the bank ’ s projections, and they are within range of reaching the amounts projected for the end of 2013, to 200 trillion yen and 140 trillion yen, respectively ( chart 17 ). however, whether or not the bank will be able to accumulate the target amount of the monetary base as expected depends on the stance of financial institutions with regard to making bids for the bank ’ s market operations. this stance could change, reflecting not only economic factors, such as economic and financial developments as well as current and future levels of interest rates, but also non - economic factors ; for example, the extent to which financial institutions are allowed to increase their current account deposits at the bank from the viewpoint of their investor relations policies. therefore, there is substantial uncertainty over the future accumulation of the monetary base in a situation where financial institutions already hold huge amounts of excess reserves at