closely monitoring inflation expectations and the inflation situation more generally. to address these developments, the federal reserve has moved in two main areas. to help relieve the pressures in the interbank markets, the federal reserve – among other actions – recently introduced a term auction facility ( taf ), through which prespecified amounts of discount window credit can be auctioned to eligible borrowers, and we have been working closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives. in the area of monetary policy, the federal open market committee ( fomc ) has moved aggressively, cutting its target for the federal funds rate by a total of 225 basis points since september, including 125 basis points during january alone. as the fomc noted in its most recent post - meeting statement, the intent of these actions is to help promote moderate growth over time and to mitigate the risks to economic activity. a critical task for the federal reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability and, in particular, whether the policy actions taken thus far are having their intended effects. monetary policy works with a lag. therefore, our policy stance must be determined in light of the medium - term forecast for real activity and inflation, as well as the risks to that forecast. at present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt. at the same time, overall consumer price inflation should moderate from its recent rates, and the public's longer - term inflation expectations should remain reasonably well anchored. although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. the fomc will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.

/ q1 - 2008 / q1 fitted 2009 / q1 - 2017 / q3 16 17 fitted 2000 / q1 - 2008 / q1 fitted 2009 / q1 - 2017 / q3 16 17 note : the gdp series in the figures are seasonally - adjusted. source : oecd. slide 4 potential growth rate y / y % chg. total factor productivity capital input labor input potential growth rate - 1 - 2 fy 85 note : based on staff estimations. figures for the first half of fiscal 2017 are those for 2017 / q2. source : bank of japan. slide 5 japan's real gdp growth avg., y / y % chg. labor productivity growth ( rate of growth in real gdp per employed person ) rate of change in the number of employed persons real gdp growth rate forecast + 1. 1 % + 0. 8 % + 0. 5 % - 1 - 0. 2 % - 0. 0 % - 0. 7 % - 1. 0 % - 2 1970s 1980s 1990s 2000s 2010s 2020s 2030s note : fiscal - year basis. the rates of change in the number of employed persons from 2017 onward are calculated using the population outlook ( medium variant ) and projected labor force participation rates ( assuming the labor force participation rate for each age / sex group remains the same as in 2016 ). sources : cabinet office ; ministry of internal affairs and communications ; national institute of population and social security research. slide 6 real gdp 2006 - 2016 avg., y / y % chg. 2. 5 labor input labour input labour productivity labor productivity 2. 0 real gdp 1. 5 1. 5 1. 0 0. 5 0. 6 0. 0 - 0. 5 japan germany ∆ ≡ ∆ ∆ ×∆ δlabor productivity δlabor input sources : haver ; cabinet office ; ministry of internal affairs and communications ; ministry of health, labour and welfare. slide 7 labor input 2006 - 2016 avg., y / y % chg. 2. 0 hours worked per person employed unemployment rate 1. 5 labourforce forceparticipation participationrate rate labor population labourinput input labor 1. 0 0. 6 0. 5 0. 0 - 0. 3 - 0. 5 - 1. 0 japan ∆ ∆ ≡ ∆ × germany ∆ δhours worked per person employed ∆ ∆ δunemployment rate × ∆ ×∆ δlabor force participation rate sources : haver ;