Thus, it is necessary to pay closer attention to the risk that the economic slowdown stemming from overseas economies will spread to prices. I will elaborate on this point later when I talk about the Bank's thinking behind the conduct of monetary policy. III. The Bank's Conduct of Monetary Policy Now, I would like to talk about the Bank's conduct of monetary policy.
The Bank has been pursuing powerful monetary easing under the framework of "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control," aiming to achieve the price stability target of 2 percent (Chart 8). The main transmission mechanism of monetary easing that the Bank assumes is to lower real interest rates, which are calculated by subtracting inflation expectations from nominal interest rates.