Such caution seems especially warranted with regard to the sharp rise in equity prices during the past two years. These gains have obviously raised questions of sustainability. Analytically, current stock-price valuations at prevailing long-term interest rates could be justified by very strong earnings growth expectations.
Since then, a large number of Bank of Japan staff members – including myself – have established strong ties with France thanks to the hospitality of the Banque de France and the pleasant atmosphere in Paris.