0. 001 %. the rate on one - year government bills declined below 0. 01 % and, since summer last year, the long - term government bond yield has stayed at a historically low level of 1. 3 - 1. 5 %. turning to ‘ quantity, ’ the current account balance at the bank of japan has increased to 15 trillion yen. you may not fully appreciate how large this figure is. the amount of reserves legally required to be held is only 4 trillion yen. thus, financial institutions are holding 11 trillion yen in excess liquidity without earning any interest. the size of monetary base, that is the sum of cash in circulation and the outstanding balance of current accounts at the bank of japan, has posted dramatic double - digit growth on a year - on - year basis to reach almost 17 % of gdp. this is the highest level over the last hundred years with the exception of a period during world war ii. the minutes of the monetary policy meeting in march 2001 describe how policy board members arrived at the decision to adopt a quantitative easing framework. i will summarize the steps leading to this decision. first, the members felt that the effects of such a framework were uncertain and might have negative side effects. second, therefore, whether the bank should adopt such a framework depended on the specific economic situation. third, they concluded that, although it had not been appropriate to adopt such measures in the preceding two years when the economy had been gradually recovering, the worsening situation in march 2001 required the bank adopt strong measures. the bank of japan has pursued such strong monetary easing measures while concurrently examining their effects, in other words, on a ‘ learning by doing ’ basis. through this process, we have learned a lot about the new measures but, at the same time, more questions have arisen. it is said that it took a long time for man to learn the concept of ‘ zero ’. i am increasingly convinced that it will also require a long time for central bankers and economists to completely understand the meaning of a zero interest rate. let me share some of my observations and current thinking on this subject. as most evident effects, we can point out that the abundant and flexible provision of liquidity under the quantitative easing framework successfully maintained extremely easy monetary conditions, thereby preserving financial market stability. you may think such effects nothing special but recall the difficulties we have experienced since the end of 2000, namely a global economic retreat triggered by the bursting of the global it bubble and the tragic events

levels. looking ahead, the slowing economy is likely to lead to some increase in the unemployment rate. fiscal support measures to cushion the impact of higher energy prices should be temporary and targeted at the most vulnerable households and firms to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability. structural policies should aim at raising the euro area ’ s growth potential and supporting its resilience. inflation inflation rose further to 9. 1 per cent in august. energy price inflation remained extremely elevated, at 38. 3 per cent, and it was again the dominant component of overall inflation. market - based indicators suggest that, in the near term, oil prices will moderate, while wholesale gas prices will stay extraordinarily high. food price inflation also rose in august, to 10. 6 per cent, partly reflecting higher input costs related to energy, disruptions of trade in food commodities and adverse weather conditions. while supply bottlenecks have been easing, these continue to gradually feed through to consumer prices and are putting upward pressure on inflation, as is recovering demand in the services sector. the depreciation of the euro has also added to the build - up of inflationary pressures. price pressures are spreading across more and more sectors, in part owing to the impact of high energy costs across the whole economy. accordingly, measures of underlying inflation remain at elevated levels and the latest staff projections see inflation excluding food and energy reaching 3. 9 per cent in 2022, 3. 4 per cent in 2023 and 2. 3 per cent in 2024. resilient labour markets and some catch - up to compensate for higher inflation are likely to support growth in wages. at the same time, incoming data and recent wage agreements indicate that wage dynamics remain contained overall. most measures of longer - term inflation expectations currently stand at around two per cent, although recent above - target revisions to some indicators warrant continued monitoring. risk assessment in the context of the slowing global economy, risks to growth are primarily on the downside, in particular in the near term. as reflected in the downside scenario in the staff projections, a long - lasting war in ukraine remains a significant risk to growth, especially if firms and households faced rationing of energy supplies. in such a situation, confidence could deteriorate further and supply - side constraints could worsen again. energy and food costs could also remain persistently higher than expected. a further deterioration in the global economic outlook could be