qqe with yield curve control : the bank introduced forward guidance for policy rates and decided to conduct market operations as well as asset purchases in a more flexible manner. as for the long - term interest rate, for example, the bank made clear that, while it would maintain the target level of " around zero percent, " the observed yields might move upward and downward to some extent mainly depending on developments in economic activity and prices. as for exchange - traded fund ( etf ) purchases, it was announced that the bank might increase or decrease the amount of purchases depending on market conditions, while maintaining the annual target of increase at about 6 trillion yen. i believe that conducting these flexible measures will lead to maintaining market functioning. the bank intends to continue paying careful attention to the risks considered most relevant to the conduct of monetary policy. with a view to achieving the price stability target, it will conduct monetary policy in an appropriate manner, taking account of developments in economic activity and prices as well as financial conditions. b. addressing changes in the economic structure so far, i have explained the bank's monetary policy measures. in what follows, i would like to talk about the points i keep in mind regarding the basic thinking behind monetary policy. at each mpm, the bank discusses the current situation of and outlook for developments in economic activity and prices as well as financial conditions, and decides on the conduct of monetary policy that is considered most appropriate for achieving the price stability target. in such policy conduct, i consider it important to make a comprehensive assessment, giving due consideration to various changes in the environment surrounding japan's economy, such as digital innovation. digital innovation in recent years has dramatically increased the quality and quantity of information people can obtain in their daily lives. although it has been only about a decade since smartphones became prevalent among the public, they have disseminated explosively worldwide. in japan, more than 60 percent of japanese people own them today. men and women of all ages carry in their pockets devices that are equivalent to the supercomputers of the past, and can access worldwide information instantly. people's lifestyles are changing significantly with smartphones : they enjoy listening to music and watching videos through digital distribution ; do shopping and make travel reservations ; look up information more quickly using their devices'search function ; and spend leisure time communicating with friends through social media and other digital tools. and it seems that such changes are becoming more rapid. besides lifestyles, structural changes have been taking place

expanding moderately, with a virtuous cycle from income to spending operating. the output gap - - which shows the utilization of capital and labor - - widened within positive territory from late 2016, for seven consecutive quarters through the april - june quarter of 2018. although the first preliminary estimate of the real gdp growth rate for the july - september quarter - - released on november 14 - - was minus 1. 2 percent on an annualized quarter - on - quarter basis, this is considered to be largely attributable to the temporary effects of natural disasters that occurred successively this summer. in fact, exports and production decreased slightly following these disasters, but have been showing recovery thereafter. corporate profits have continued to follow their uptrend at record high levels, and business fixed investment also has continued on an increasing trend. according to the september 2018 tankan ( short - term economic survey of enterprises in japan ), business fixed investment plans for fiscal 2018 registered a year - on - year increase of 8. 7 percent - - a level clearly exceeding the past average for the september tankan surveys. meanwhile, labor market conditions have continued to tighten steadily and total cash earnings per employee have risen moderately. under these circumstances, the consumption activity index ( cai ) - - which is calculated by combining various sales and supply - side statistics - - increased for the april - june quarter on a quarter - on - quarter basis and continued to do so for the july - september quarter relative to the previous quarter. 2. outlook i will now look at the outlook for japan's economy during the projection period, which covers from fiscal 2018 through fiscal 2020. the economy is likely to continue its moderate expansion. in fiscal 2018, japan's economy is likely to continue growing at a pace above its potential growth rate, which is estimated to be in the range of 0. 5 - 1. 0 percent, mainly against the background of highly accommodative financial conditions and the underpinnings through government spending, with overseas economies continuing to grow firmly on the whole. from fiscal 2019 through fiscal 2020, the economy is expected to continue on an expanding trend, partly supported by external demand, although the growth pace is projected to decelerate due to a cyclical slowdown in business fixed investment and the effects of the scheduled consumption tax hike in october 2019. in terms of the median of the policy board members'forecasts in the october 2018 outlook report, the real gdp growth rate is 1. 4 percent for fiscal 2018