1. 8 percent for fiscal 2017, from the april forecasts. the year - on - year rate of increase in the cpi ( all items less fresh food ) is likely to be about 0 percent for the time being, but the rate will likely accelerate gradually, on the assumption that dubai crude oil prices will rise moderately from 60 u. s. dollars per barrel. bis central bankers ’ speeches ii. keys to assessing the outlook for economic activity and prices i believe that japan ’ s economic and price conditions have already regained stability consistent with the economy ’ s growth potential, mainly due to the effects of almost two and a half years of quantitative and qualitative monetary easing ( qqe ). i expect that such stable conditions will continue through fiscal 2017 – the projection period covered in the bank ’ s april 2015 outlook report and its interim assessment in july. however, i hold a more cautious view on the outlook for japan ’ s economic activity and prices compared with the aforementioned forecasts in the policy board members ’ baseline scenario regarding that activity and prices in the july interim assessment. let me share some of my considerations regarding the outlook with you. a. output gap, potential economic growth rate, and outlook for the growth rate according to the estimates the bank presented in the april 2015 outlook report, the potential growth rate of japan ’ s economy, which represents – from the supply side – the pace of growth that is consistent with the economy ’ s growth potential, has been around 0. 5 percent or lower, and thus remains at a low level. the bank also estimates japan ’ s output gap, which represents the degree of utilization of labor and production capacity, at 0. 1 percent for the january - march quarter of 2015. the output gap has maintained a neutral level of around 0 percent since the end of 2013. i would like to note that the output gap in japan is also at a favorable level compared with those in other major countries, according to the estimates made by the organisation for economic co - operation and development ( oecd ). while these estimates are subject to a considerable margin of error, they generally have been in line with developments in the weighted average of the diffusion indices for production capacity and employment conditions in the bank ’ s tankan ( short - term economic survey of enterprises in japan ). the active job openings - to - applicants ratio and other indicators also suggest that supply and demand conditions in the labor market are tightening further, rather than being neutral. however, in a situation

markets. let me illustrate this by looking at two examples. the first is a cut in short - and long - term interest rates. cutting short - and long - term interest rates is one of the essential options for additional easing measures. the bank provides a clear guideline for the levels of short - and long - term interest rates, in which it expects them to " remain at their present or lower levels " as long as it is necessary to pay attention to the impact of covid - 19. in other words, the bank will cut short - and long - term interest rates appropriately when necessary. however, a further decline in interest rates could affect the functioning of financial intermediation. in addition, it is true that because of this possible negative impact, one view in the market is that the bank finds it difficult to further cut short - and long - term interest rates. with these factors in mind, it is appropriate to ensure that the bank can cut them with consideration for the impact on the functioning of financial intermediation. sharing this recognition with market participants and various economic entities will further enhance the effectiveness of a cut in short - and long - term interest rates as an option for additional easing. the second example is purchases of etfs and j - reits. some lessons can be learned from the bank's responses to covid - 19 last spring ( chart 11 ). as financial markets became significantly volatile at that time, the bank decided to actively purchase etfs and j - reits with upper limits of about 12 trillion yen and about 180 billion yen, respectively, on annual paces of increase in their amounts outstanding. such decisive purchases have had significant positive effects in terms of easing market sentiment, which had deteriorated considerably. the aim of purchasing etfs and j - reits is to lower risk premia, such as in the stock market, in order to create positive effects on economic activity and prices by preventing volatile developments in financial markets from leading to deterioration in firms'and households'sentiment. a survey conducted by a private institute indicates that etf purchases by the bank are assessed as having positive effects on the markets when they are unstable, in that stock prices decline and volatility heightens. based on lessons learned to date, including from the case in last spring, it has become evident that large - scale purchases at the time of volatile financial markets will have significant positive effects. the bank will further analyze the difference in the effects of purchases according to market conditions and will examine whether