percent in september. the bank views the outlook for prices as follows. the pace of year - on - year rate of decline in the cpi ( excluding fresh food ) is expected to slow down significantly in the second half of fiscal 2009. that is because the base effect from last year's high petroleum product prices will dissipate. thereafter, the cpi ( excluding fresh food ) is expected to be basically subject to the development in the aggregate supply and demand balance. from fiscal 2010 onward, the rate of decline in the cpi ( excluding fresh food ) is likely to continue to moderate, as the economy picks up as well as the aggregate supply and demand balance improves gradually. however, downward pressure on prices is likely to remain for a relatively long period, given that the negative output gap, which underlies this projection, is larger than ever and that the pace of economic recovery is likely to be moderate. since the current plunge in demand was as sharp as no country experienced for a long period, it is commonly considered also in the united states and europe that it will take a considerable period for inflation rates to recover to the past levels. in those circumstances, what is important is whether, as a future baseline scenario, japan's economy returning to a sustainable growth path with price stability is in sight. it is an issue for those who worry about the effects of price decline, whether the continued decline in prices, albeit modestly, will postpone spending, leading to further acceleration in price declines. what might serve as a reference here is japan's experience in the first half of the 2000s. while there were many arguments about deflation at that time, eventually japan's economy started to recover amid the continued modest decline in prices. the year - on - year growth of the cpi had been slightly negative, at around just under minus 3 percent on a cumulative basis, for seven years from fiscal 1998 to 2004. meanwhile, despite the price decline, the economy continued to recover from fiscal 2002 to 2007. while that has been a puzzle to one who worries about deflation, such a situation has been drawing interest from the overseas policy authorities and economists. in this regard, a difference from the global economy in the 1930s, when deflation was a grave problem, might give us a clue. unlike japan in the early 2000s, prices plunged by more than 20 percent on a cumulative basis, or more than 30 percent in some countries, in the global economy in the 1930s. moreover, in the 1930s, the

haruhiko kuroda : monetary policy – its effects and implementation opening remarks by mr haruhiko kuroda, governor of the bank of japan, at the 2015 bojimes conference, hosted by the institute for monetary and economic studies, bank of japan, tokyo, 4 june 2015. * i. * * introduction good morning, ladies and gentlemen. it is my great honor to say a few words at the beginning of the 22nd boj - imes conference. on behalf of my colleagues at the bank of japan and myself, i would like to express my sincere welcome to all of you. at last year ’ s conference titled “ monetary policy in a post - financial crisis era, ” we had active discussions on fundamental issues of monetary policy during the period of slow economic growth following the global financial crisis. since then, there has been further progress in research on the effects of unconventional monetary policy in academic and central bank circles. besides, growing attention has been paid to renewed debate over the slow recovery after the financial crisis, as represented by the thesis of secular stagnation. against the backdrop of these factors, we have selected “ monetary policy : its effects and implementation ” as the theme of this year ’ s conference. the aim is not only to keep monetary policy at the center of the discussion, but also to put greater emphasis on implications for policy conduct in practice. i hope that, in light of the progress in monetary policy research and the recent developments in the global economy, we will have frank and lively discussions on the monetary policy challenges that we central bankers currently face. to kick things off, i would like to raise some issues relevant to these challenges. ii. global economic conditions and current issues concerning the conduct of monetary policy over the past year, the global economy as a whole has been recovering moderately. however, we have observed considerable differences in developments of economic activity and prices among countries and regions. in reflection of these differences, diverging directions of monetary policy among the united states, europe, and japan have become increasingly apparent. this certainly was a major feature of monetary policy in the global context for the past year. meanwhile, headline inflation rates dropped globally, due primarily to a plunge in crude oil prices. with these significant developments in mind, i would like to raise three current issues concerning the conduct of monetary policy. the first issue concerns the effects of unconventional monetary policy and its transmission channels. in terms of monetary policy implementation, the european central bank launched the expanded asset purchase programme