- long - term jgbs, for example, market participants widely share the view that the bank might proceed with the reduction in the pace of its jgb purchases as long as circumstances permit. it should be noted that one of the reasons why financial markets have stayed relatively calm despite such a view is that market participants are to some degree accepting the stock view — that is, the idea that the reduction in long - term interest rates and resultant monetary easing effects depend on a central bank ’ s holdings of government bonds ( stock ) rather than the pace of bond purchases ( flow ). under these circumstances, i believe that the bank should set the amounts of its asset purchases as the target for money market operations, and for the time being incrementally reduce the pace of its jgb purchases to the level at which the amount outstanding will be unchanged, instead of conducting yield curve control under which the controllability of the amount of its jgb purchases seems uncertain. this alternative measure will contribute to making the bank ’ s asset purchases more sustainable and enhancing market stability. by doing so, the bank can keep long - term real interest rates stably at low levels and thereby secure the accumulated monetary easing effects seen so far, which i believe is most important for the bank ’ s monetary policy. 6 / 8 bis central bankers'speeches c. my view regarding the price stability target and the role of monetary policy 1. need for the flexibility of the 2 percent price stability target in addition to the proposal to change the guidelines for money market operations, i have been submitting a proposal to reset the time frame for achieving the price stability target of 2 percent to the medium to long term. i consider it appropriate to implement these two proposals together. next, i will explain my view regarding the price stability target that lies behind my proposals. first of all, i believe that the optimal inflation rate is at a level where households and firms can engage in economic activity in a stable manner without worrying about price developments. this rate is mostly consistent with medium - to long - term inflation expectations of households and firms. however, i should note that a wide range of indicators suggest that medium - to long - term inflation expectations have been clearly below 2 percent for a long time. i therefore consider it inappropriate at this point to aim at achieving the 2 percent price stability target in a short period of time — whereby the inflation rate will be maintained at around 2 percent in a stable manner — not only because this is unfeasible

products and thereby might have a negative impact on economic activity through a deterioration in people ’ s sentiment. i consider that there is a positive aspect to yield curve control. for example, the bank now has some latitude in terms of the pace of its purchases of japanese government bonds ( jgbs ) because it changed the target for money market operations to short - and long - term interest rates upon the introduction of yield curve control. this leads to the possibility that the pace of jgb purchases will be reduced, thereby increasing the sustainability of such purchases. however, as i will elaborate on shortly, my view is that there also are many negative aspects to yield curve control. based on my examination and comparison of positive and negative aspects, i have been casting a dissenting vote on yield curve control since its introduction in september 2016 through the most recent mpm held in january 2017. a. assessment of yield curve control 1. issues regarding long - term interest rate control i view the following as issues with regard to long - term interest rate control. first, under yield curve control, it is uncertain whether the pace of the bank ’ s jgb purchases will slow to an extent that would be sufficient to enhance the sustainability of such purchases ; instead, there is a risk that the bank might need to further increase the pace of its purchases. since “ quantity ” and “ interest rate ” are generally determined simultaneously, my understanding is that it is difficult to conduct smooth money market operations while setting explicit targets for both dimensions. when the interest rate dimension is to be controlled, control over the quantity dimension could be lost. therefore, the bank ’ s new policy framework can be explained as having taken this point into consideration, and non - rigid targets have been set on both the quantity and interest rate dimensions — indicating that an annual pace of increase in the amount outstanding of the bank ’ s jgb holdings should be “ about ” 80 trillion yen, and the target level of 10 - year jgb yields is set at “ around ” zero percent. however, i regard this as entailing a high possibility that neither target will be achieved. such a possibility is likely to materialize when there are external shocks to the jgb market. i therefore consider that the current upward pressure on japanese long - term interest rates, which has been stemming from the rise in such rates in the united states since november 2016, is posing the first challenge for the bank in controlling long - term interest rates. second, of the elements that constitute nominal