the cabinet, subject to the consent of the house of representatives and the house of councillors, and shall not be dismissed against their will during their terms of office of five years, except in special cases such as becoming incapable of carrying out their duties due to mental or physical disorder. at the same time, we the policy board members conduct our daily duties by fully recognizing the responsibility that we – who are not chosen by election – are granted considerable authority to make monetary policy decisions, which significantly affect people ’ s lives. therefore, in order to maintain and enhance the public ’ s trust, i believe that it is vital to further enhance the transparency of the conduct of monetary policy – that is, communication to the diet and the public by thoroughly explaining the bank ’ s thinking on the conduct of monetary policy. we are also listening with all due respect to the government ’ s and public ’ s opinions on monetary policy conduct and working to incorporate them into policymaking, and i regard today ’ s meeting as one such opportunity for this. bis central bankers ’ speeches

other major economies since the 1980s, japan ’ s inflation rate has remained at a consistently low level, unlike the case of other major economies. according to the oecd, during the decade from 1985 to bis central bankers ’ speeches 1995, the year - on - year rate of change in the cpi in the g - 7 countries was 3. 3 percent on average, while in japan it was 1. 4 percent. for the 15 years thereafter, from 1996 to 2011, the year - on - year rate of change in the cpi in the g - 7 countries was 1. 9 percent on average, while in japan it was minus 0. 1 percent. the difference between the averages of japan ’ s inflation rate and those of the g - 7 countries remained mostly unchanged : approximately 1. 9 percent for the first ten years from 1985 and around 2. 0 percent for the 15 years thereafter, when japan ’ s economy fell into deflation. this indicates that, during the 25 years as a whole, japan and the other major economies generally experienced a long downtrend in their inflation rates. i see in this the possibility that japan ’ s deflation might have been brought about by the downtrend in global inflation. in particular, a large negative output gap – a state of excessive supply – continues to be seen in the major economies since the lehman shock, on the back of balance - sheet adjustments in the aftermath of the credit bubble. this has created an environment where the inflation rate is subject to downward pressure, and such developments overseas could also be considered to have exerted downward pressure on price developments in japan. b. major factor behind the difference between inflation rates in japan and the united states : the service sector i would also like to compare and examine price developments in japan and abroad. for example, if we compare price developments in japan and the united states, in japan the year - on - year rate of change in the cpi was minus 0. 2 percent on average between 1997 and 2011, while in the united states it was 2. 4 percent, resulting in a gap of 2. 6 percentage points. the major factor behind this was a difference in the contribution of prices of services less rent, which accounted for about one - third of the 2. 6 percentage point gap, or 0. 9 percentage point. when rent was included, services prices accounted for almost twothirds of the gap, or about 1. 7 percentage points. in my view, the fact that services prices are