hotels group also followed a similar course owing to shrinking demand and decelerating food prices ( figure 5 ). i would particularly like to draw attention to the decrease of annual rent inflation. seasonally adjusted data point to a continual and accelerating downward trend in rents in the first quarter of the year. the slowdown in services prices is expected to continue in the upcoming period as well. figure 4 : services prices figure 5 : services prices ( annual percentage change ) ( first quarter percentage change ) other services transportation services rent restaurants and hotels 2006 - 2007 average - 1 - 2 03 05 07 09 11 01 03 05 07 09 11 01 03 07 07 07 07 07 08 08 08 08 08 08 09 09 source : turkstat, cbt. other services transportation rent services restaurants and hotels source : turkstat, cbt. the first quarter saw a significant decline in the prices of durables excluding gold ( table 1 ). while the said decline was mainly driven by the sct ( special consumption tax ) reduction on automobiles, white goods and electronic products to be effected for a limited period of three months from march onwards, automobile prices, by displaying sharp decline, were chief determinants in prices of this group. the favorable effect of these reductions started to be observed on the domestic sales of automobiles and household goods in march ( figure 6 ). moreover, the temporary vat cut on furniture and it products for a three - month period will have a short - term restraining effect on annual inflation in durables. nevertheless, the lagged effects of the exchange rate pass - through on the prices of durable goods are expected to be partially seen following the depletion of current inventories. table 1. prices of durable goods ( quarterly and annual percentage change ) i iv annual i 1. 58 2. 81 - 1. 80 0. 61 3. 19 - 2. 49 4. 13 7. 60 - 1. 27 - 1. 31 9. 17 - 3. 17 electric and nonelectric 1. 16 0. 68 0. 12 appliances 6. 04 8. 13 automobiles 1. 04 2. 44 - 3. 63 - 2. 30 - 2. 56 - 1. 36 other 0. 04 0. 89 1. 02 2. 27 4. 29 0. 36 durable goods ( excl. gold ) furniture ii iii - 4. 26 source : turkstat. cbt. figure 6 : domestic sales of automobiles ( seasonally adjusted, quantity ) source : turkstat,

’ speeches 4. multi - faceted challenges and unconventional monetary policy the consequences of japan ’ s prolonged balance sheet adjustment under population ageing described so far lead us to a number of multi - faceted challenges. the first challenge is that of cyclical - stabilization : ensuring a return to sustainable growth with price stability, when the policy rate is near zero and longer - term risk - free rates are also very low. in japan ’ s case, this also means overcoming deflationary pressures. the second challenge is to enhance the growth trend, or strengthen the foundations for growth. in other words, the challenge is to raise long - term growth prospects, especially in domestically - oriented growth. this should be done by solving the coordination failure in banking and capital markets described above. the third challenge is to avoid causing problems in national debt management. we should design and execute carefully measures to cope with the first and the second challenge, taking appropriate account of the current national debt situation as explained before, as well as general economic conditions. to tackle the first and the second challenges, the bank of japan instituted its growth foundation strengthening facility ( gfsf ) in june of last year and adopted comprehensive monetary easing ( cme ) in october. to meet the challenge of “ cyclical - stabilization ”, the first part of the cme changed the guidance for the policy rate from 0. 1 % to the range between 0 and 0. 1 %, making clear the bank ’ s virtually zero - interest rate policy ( vzirp ). for the second part of the cme, the bank clarified its policy duration commitment : the bank will continue its vzirp until it judges price stability to be in sight on the basis of the policy board members ’ understanding of price stability. with policy board members ’ announced forecasts for two years ahead, this is similar to “ forecast targeting ” though not specific in numbers. the third part of the cme is the asset purchase program, which is also designed to meet the cyclical - stabilization challenge. its aim is to influence downward longer - term rates. the outright purchase of jgbs with remaining maturity of 1 – 2 years and t - bills is to reduce the term - premiums of risk - free rates, and the purchase of cps and corporate bonds is to reduce both term - premiums and riskpremiums. the scheme to provide 3 - month funds at the overnight rate already instituted was aimed at lowering rates longer than the overnight rate, and has