economies, we have now enjoyed 16 straight quarters of growth, with the dispersion of gdp and employment growth rates among countries falling to record low levels. if one looks at the percentage of all sectors in all euro area countries that currently have positive growth, the figure stood at 84 % in the first quarter of 2017, well above its historical average of 74 %. around 6. 4 million jobs have been created in the euro area since the recovery began. the role of monetary policy in this growth story is clear. since mid - 2014, our monetary policy stance has been determined by the combination of three instruments : first, low policy interest 1 / 7 bis central bankers'speeches rates ; second, asset purchases in financial markets and targeted long - term refinancing operations for banks ; reinforced by, third, forward guidance on both. this has created strong downward pressure on financing costs, with rates falling steeply across asset classes, maturities and countries, as well as across different categories of borrowers. converging financing conditions have in turn fed into rising domestic demand. according to our bank lending survey, our latest easing phase has coincided with a strong rebound in demand for consumer credit to purchase durable goods, while demand for loans for fixed investment has gradually firmed. at the same time, falling borrowing costs have reduced interest payment burdens and facilitated deleveraging, which is one reason why, for virtually the first time since 1999, spending has been rising while indebtedness has been falling. this is a sign that the recovery may be becoming more sustainable. just to put our measures into context, since january 2015 – that is, following the announcement of the expanded asset purchase programme ( app ) – gdp has grown by 3. 6 % in the euro area. that is a higher growth rate than in same period following qe1 or qe2 in the united states, and a percentage point lower than the period after qe3. employment in the euro area has also risen by more than four million since we announced the expanded app, comparable with both qe2 and qe3 in the us, and considerably higher than qe1. for the monetary transmission process to work, however, stronger growth and employment ought to translate into higher capacity utilisation, scarcity in production factors and – in time – upward pressure on wages and prices. and this is what we see. the unemployment gap – the difference between actual unemployment and the non - accelerating inflation rate of unemployment (

in a situation where demand is expected to increase sustainably, firms will be able to charge higher markups ( profit margins ) or pass production costs more directly on to sales prices. if these developments are structural, this will steepen the phillips curve, which will also increase upward pressure on prices. third, it is likely that a mechanism will operate through which improvements on the supply side increase people ’ s medium - to long - term inflation expectations. if people expect that economic activity and sales will continue to improve, their inflation expectations will increase – considering, for example, the phillips curve relation in the future. this mechanism is called forward - looking expectation formation of the new keynesian phillips curve. improvements on the supply side thus increase people ’ s somewhat long - term inflation expectations, and in turn shift up the intercept of the phillips curve. in fact, medium - to long - term inflation expectations have been increasing gradually ( chart 4 ). developments in medium - to long - term inflation expectations seem to largely correlate with those in the potential growth rate per capita that i explained earlier, with the exception of the most recent period ( chart 13 ). in a situation where these mechanisms work in combination, it is possible to say, as suggested from chart 3, that upward pressure on the consumer price inflation rate has been increasing. in other words, mechanisms such as ( 1 ) sustainable improvement in the output gap and increasing expectations for future improvement, ( 2 ) firms ’ increased ability to pass costs on to sales prices, and ( 3 ) a rise in medium - to long - term inflation expectations have all contributed to heightening upward pressure on overall prices. i should note that, as a different kind of logic to explain the recent rise in prices in japan, some argue that prices have risen due to the constraint of sluggish supply. how should we explain this argument? i consider the key to be whether the supply capacity of the economy is actually increasing. price rises that are not accompanied by improvements on the supply side will restrain growth in demand and thus prevent economic activity from expanding. looking at the recent situation in japan, however, improvements on the supply side have see ryuzo miyao, makuro kinyu - seisaku no jikeiretsu bunseki ( time - series analysis of macroeconomic monetary policy ), chapter 8, nikkei inc., 2006, pp. 209 – 245 ( available in japanese ). bis central bankers ’ speeches become clear over the past year