view as the distinctive necessary conditions to such a remarkable achievement can be summarised in some decisive factors of the institutional framework of emu on the one hand and of the ecb ’ s monetary strategy on the other hand. first of all, the treaty clearly establishes that monetary policy in the euro area is conducted by an independent central bank. the treaty itself guarantees for the independence of the ecb thereby ensuring that the ecb will have no impediment in pursuing its primary objective of price stability. market participants in the euro area as well as social partners and the public at large know with certainty that the maintenance of price stability over time will not depend on short - term considerations of any nature. this is certainly a necessary pre - condition for the anchoring of long term inflation expectations. turning to the elements of the strategy that are more directly instrumental in helping long term inflation expectations to be firmly anchored to the ecb ’ s definition of price stability, i shall list first the clarity of the ecb ’ s objective. the ecb ’ s governing council aims at maintaining the euro area inflation rate at “ below and close to 2 % ”. the wording is precise enough to provide a reference point for those individuals, social partners and market participants who need to take decisions based on the price outlook. at the same time, the definition of the inflation objective takes into account both the uncertainty that monetary policy has to face and the limits to its own actions. it is my opinion that inflation expectations in the euro area have proved to be consistently anchored in the medium term because everybody has appreciated the ecb ’ s honesty and transparency as well as its firm commitment to ensure price stability in the euro area. furthermore, people have recognised in the quantitative definition of price stability complete continuity with the definition existing before in the national currency areas that had crystallized the highest level of confidence. the second element of the strategy that, i think, provides a solid conceptual anchoring to inflation expectations is the comprehensiveness that characterises the macroeconomic analysis leading up to the governing council ’ s policy decisions. the ecb has always explained that its approach to organising, evaluating and crosschecking the information relevant for assessing the risks to price stability is based on two analytical perspectives, referred to as the “ two pillars ”. the two - pillar approach is a way of conveying to the public the notion of a diversified analysis and of ensuring robust decision - making based on different analytical perspectives. in particular, by taking into account the

the outlook for economic activity and prices ( hereafter the outlook report ). as a result of the revision to seasonal adjustments carried out in april 2010, it is likely that a portion of the significant drops in production in the october - december quarter of 2008 and the january - march quarter of 2009 is recognized as seasonal rather than actual movement. such a seasonal adjustment method would push up future growth rates for the october - december and january - march quarters, but push down those for the april - june and july - september quarters. therefore, it is necessary to assess actual terms for the apriljune and july - september quarters by adjusting for such downward pressure. bis central bankers ’ speeches starting with the outlook for the economy, the pace of recovery is likely to slow temporarily in the second half of fiscal 2010 due to factors such as the slowdown in overseas economies and the ending of the boost from policy measures targeted at durable consumer goods, as well as the recent appreciation of the yen. the growth rate of the economy for the october – december quarter of 2010, in particular, is highly likely to turn out negative following the higher - than - expected growth in the july – september quarter. however, although the effects of the appreciation of the yen may continue to linger, the economy is expected to return to a moderate recovery path once we enter fiscal 2011, given that – with growth in overseas economies expected to pick up again – exports are projected to continue increasing and firms ’ sense of excessive capital stock and labor is likely to dissipate gradually. in fiscal 2012, japan ’ s economy is expected to continue growing at a pace above its potential amid the continued relatively high growth in overseas economies, especially emerging and commodity - exporting economies. although my view regarding the outlook is basically in line with the bank ’ s projection, i am concerned about the extent to which japan ’ s economy will be able to benefit from global economic growth. in fact, i have a growing sense that japan has not yet enjoyed much success in this regard, given that the pace of growth in japan ’ s exports has been more moderate than that of other countries since the mid - 1990s and that japan ’ s share in world exports has been declining since the mid - 1990s despite trade liberalization in countries such as china. moreover, japan is likely to face an even tougher global competitive environment due not only to the recent rapid appreciation of the yen – in a situation where domestic capacity is yet underutilized – but also to factors unrelated to