. bis central bankers ’ speeches based on that view, the bank of japan ’ s monetary policy is conducted within a framework in which the bank examines various risk factors, including those related to financial imbalances, in addition to the assessment of the current developments and outlook for economic activity and prices, from the perspective of achieving sustainable growth with price stability. when too much priority is placed on short - term price stability, there is a risk that the financial system will become unstable in the future, which in turn could undermine medium - to longterm price stability. on the other hand, when too much emphasis is placed on financial system stability, confidence in a central bank ’ s efforts toward achieving price stability could deteriorate. in order to avoid falling into such situation, a central bank needs to conduct monetary policy in a balanced manner. iv. the bank ’ s recent conduct of monetary policy lastly, i will briefly touch on the bank ’ s recent conduct of monetary policy. at the monetary policy meeting ( mpm ) held on october 31, 2014, the policy board decided to expand quantitative and qualitative monetary easing ( qqe ). as i cast a dissenting vote on this decision, i may be in a delicate position to talk about this policy change. however, i take this opportunity to explain the policy decision and provide my views to the best possible extent. the bank ’ s assessment is that japan ’ s economy has continued to recover moderately as a trend, despite being affected by the consumption tax hike in april 2014, and is expected to continue to do so. although weakness remains in exports, production, and some indicators relating to consumption, the mechanism for economic recovery has been steadily maintained on the back of the firm employment and income situation as well as resilient household and business sentiment. on the price front, somewhat weak developments in demand following the consumption tax hike and a substantial decline in crude oil prices have been exerting downward pressure recently. a temporary weakness in demand has already started to wane, and the decline in crude oil prices will have positive effects on economic activity from a somewhat longer - term perspective and eventually will push up prices. nevertheless, if the current downward pressure on prices remains, albeit in the short term, there is a risk that conversion of the deflationary mindset, which has so far been progressing steadily, might be delayed. to pre - empt manifestation of such risk and to maintain the improving momentum of expectation formation, the bank judged it

masaaki shirakawa : japan ’ s economy and monetary policy speech by mr masaaki shirakawa, governor of the bank of japan, at a meeting with business leaders, osaka, 27 september 2010. * * * introduction i am privileged to be here today to speak and exchange views with business leaders from the kansai region. i would like to take this opportunity to express my deep gratitude to you for your cooperation with the bank of japan ’ s branches in osaka, kobe, and kyoto. at present, the greatest concern for the time being for you as business leaders must be the recent appreciation of the yen and its impact on japan ’ s economy. before we exchange views, i will first outline developments in the global economy and associated trends in the foreign exchange markets. i will then speak about japan ’ s economic situation and the bank ’ s thinking on monetary policy. i. developments in the global economy i will start with developments in the global economy. since the spring of 2009, the global economy, driven particularly by emerging economies, has continued to grow at about 5 percent on an annual basis. while it is natural to have high growth rates as the global economy has been recovering from the plunge following the lehman shock, the growth rate figures have substantially exceeded the average annual growth rate of 3. 9 percent over the 10 years prior to the lehman shock. however, the pace of growth has slowed somewhat recently, partly because the effects of various demandboosting policy measures introduced in response to the financial crisis in the advanced economies of the united states and europe have started to recede and emerging economies have been shifting away from accommodative monetary policies. in the united states, while production continues to increase on the back of buoyant exports, concern has increased about a possible slowdown in the u. s. economy as many indicators related to domestic demand, especially indicators of private consumption and housing, have been pointing since the second half of july to a slower economic recovery. economic activity in the euro area is recovering moderately as a whole, but economic disparities in the area have widened : while exports and production in the main economies, especially germany, have been boosted by the depreciation of the euro, economic growth in peripheral countries such as greece has been sluggish as both the public and private sectors are mired in excessive debt. meanwhile, emerging economies are growing robustly. in this situation, many emerging countries have been moving away from accommoda