after the establishment of formal diplomatic relationship between the united states and japan, and by then the number of japanese citizens in new york had started to pick up. in fact, this place where we are all gathered tonight, the nippon club - which stands for japan club - will also be celebrating its 100th anniversary this year. benefits from the presence in new york the new york market has continued to grow over the years. time and again, japan has benefited from financial activities in this market. debt issuance following the great kanto earthquake of 1923 is one such instance. when the deal was arranged, the governor of the bank at the time, junnosuke inoue, played an important role. it is interesting to note that his first hand knowledge of the new york market as well as the bonds he formed with u. s. bankers during his tenure as general manager of our new york office proved to be quite valuable for future endeavors. equally significant has been the fact that, over the years, we have had the pleasure of engaging ourselves in countless discussions with such eminent figures as market participants, distinguished scholars, and especially the esteemed federal reserve officials, on topics ranging from monetary policy to financial market developments. on december 1913, the federal reserve act was enacted, and the following year, the federal reserve bank of new york came into existence. through the discussions with the fed, we have 7developed common understandings, such as : the importance of price stability for sustainable economic growth ; the importance of a sound financial system as well as liquid and well functioning financial markets. today, the primary responsibility of the new york office is to develop a channel for a candid dialogue with respectable people widely in the region it covers, that is, both north and south america, but the crucial part is of course the united states, above all, federal reserve officials and banking communities here. it is no exaggeration to say that new york office has been very successful in creating a bond of trust between us. this strong partnership has helped us weather a storm at times of difficulties. at times of no difficulties, too, our new york office gave essential inputs to discussions in tokyo, thereby enabling us to learn a lot about not only the u. s. economy but also economic and financial developments in the world. let me emphasize that our new york office is performing a very important role within the bank of japan. that is not just my personal view, but the entire policy board of the bank appreciates the contribution

a moderate pace. later, i will talk in more detail about this employment and income situation in the context of its implications for prices and monetary policy. with regard to the price developments, excluding the direct effects of the consumption tax hike, the year - on - year rate of increase in the consumer price index ( cpi, all items less fresh food ) was 0. 5 percent for december 2014. b. outlook for economic activity and prices the bank of japan releases the outlook for economic activity and prices semiannually in april and october. at the monetary policy meeting held last month, the policy board members, as their interim assessment, revised their projections of real gdp and the cpi made last october. with regard to the outlook, japan ’ s economy is expected to continue growing at a pace above its potential as a trend, while it will be affected by the front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike. exports are expected to increase moderately mainly against a background of the recovery in overseas economies. as for domestic demand, business fixed investment is expected to continue with a moderate increasing trend with corporate profits following their improving trend. private consumption is expected to remain resilient with the employment and income situation continuing to improve steadily, and the effects of the decline in demand after the consumption tax hike are expected to dissipate gradually. reflecting those developments in demand both at home and abroad, industrial production is expected to resume its moderate increase. on the price front, the year - on - year rate of increase in the cpi, excluding the direct effects of the consumption tax hike, is likely to slow for the time being, reflecting the decline in energy prices. meanwhile, the outlook for the underlying trend remains unchanged from that made last october, based on expectations that an improvement in the output gap continues as a trend and that the increasing trend in the medium - to long - term inflation expectations continues. taking a closer look at various surveys, the expected inflation rates remain likely to accelerate steadily, despite the recent decline in crude oil prices ( chart 3 ). in this interim assessment, on the assumption that crude oil prices will rise moderately from the recent levels, the bank expects that the year - on - year rate of change in the cpi is likely to accelerate gradually as the base effect of the falling crude oil prices dissipates and reach around bis central bankers ’ speeches 2 percent around the middle of the projection period ; that is, in or around fiscal 2015. thereafter, japan