has the tools it needs to raise short - term interest rates when it becomes appropriate to do so and to maintain reasonable control of the level of short - term interest rates as policy continues to firm thereafter, even though the level of reserves held by depository institutions is likely to diminish only gradually. the primary means of raising the federal funds rate will be to increase the rate of interest paid on excess reserves. the committee also will use an overnight reverse repurchase agreement facility and other supplementary tools as needed to help control the federal funds rate. as economic and financial conditions evolve, the committee will phase out these supplementary tools when they are no longer needed. the committee intends to reduce its securities holdings in a gradual and predictable manner primarily by ceasing to reinvest repayments of principal from securities held by the federal reserve. it is the committee ’ s intention to hold, in the longer run, no more securities than necessary for the efficient and effective implementation of monetary policy, and that these securities be primarily treasury securities. summary in sum, since the july 2014 monetary policy report, there has been important progress toward the fomc ’ s objective of maximum employment. however, despite this improvement, too many americans remain unemployed or underemployed, wage growth is still sluggish, and inflation remains well below our longer - run objective. as always, the federal reserve remains committed to employing its tools to best promote the attainment of its objectives of maximum employment and price stability. thank you. i would be pleased to take your questions. bis central bankers ’ speeches

- 2 - 1 - 4 - 2 - 6 - 3 - 8 cy 85 - 4 note : figures for the cpi are adjusted for changes in the consumption tax rate. figures for the output gap are based on boj staff estimates. sources : ministry of internal affairs and communications ; bank of japan. chart 9 ii. price developments inflation expectations 2. 5 synthesized inflation expectations indicators ( survey data etc. ) y / y % chg. 2. 0 households'tolerance of price rises firms, households, and experts ( quick survey ) firms, households, and experts ( consensus forecasts ) firms, households, and experts ( inflation swap rate ) 1. 5 1. 0 - 5 0. 5 - 10 0. 0 cy 07 - 15 cy 83 estimates of inflation expectations ( economic models ) 2. 0 y / y % chg. output prices di for consumption - related industries ( tankan ) di ( " rise " - " fall " ), % points firms'forecasts 1. 5 1. 0 long - term 1 long - term 2 medium - term 0. 5 0. 0 - 0. 5 cy 07 di ( " favorable " - " unfavorable " ), % points - 10 large enterprises small enterprises - 20 - 30 - 40 cy07 note : for details, see box 7 in the october 2019 outlook report. sources : quick, " quick monthly market survey ( bonds ), " " quick tankan " ; jcer, " esp forecast " ; consensus economics inc., " consensus forecasts " ; wolters kluwer, " blue chip economic indicators " ; bloomberg ; ministry of finance ; ministry of internal affairs and communications ; cabinet office ; bank of japan. chart 10 ii. price developments boj's price forecasts cpi ( all items less fresh food ) < october 2019 outlook report > 2. 5 y / y % chg. price stability target ( 2 % ) 2. 0 fiscal 2019 + 0. 7 % 1. 5 1. 0 fiscal 2021 + 1. 5 % 0. 5 fiscal 2020 + 1. 1 % 0. 0 - 0. 5 - 1. 0 fy12 note : the actual figures exclude the direct effects of the consumption tax hike in april 2014. forecasts are the medians of the policy board members'forecasts ( point estimates ). sources : ministry of internal affairs and communications ; bank of japan. chart 11 iii. the bank's conduct of monetary policy