qqe with a negative interest rate, which is designed to enable the bank to make full use of possible monetary easing measures in terms of the three dimensions of quantity, quality, and the interest rate, with the new option of a negative interest rate being added. in addition, at the mpm held in july 2016, the bank decided on an increase in purchases of exchange - traded funds ( etfs ) and measures to ensure smooth funding in foreign currencies, for two reasons : in order to prevent uncertainties that have been heightening against the backdrop of the united kingdom ’ s vote to leave the eu and the slowdown in emerging economies from leading to a deterioration in business confidence and consumer sentiment, and to ensure smooth funding in foreign currencies by japanese firms and financial institutions, thereby supporting their proactive economic activities. against the backdrop of considerable uncertainty over the outlook for prices in view of uncertainties surrounding overseas economies and global financial markets, the bank – with a view to achieving the price stability target at the earliest possible time – also decided that it would conduct a comprehensive assessment of the developments in economic activity and prices under qqe and qqe with a negative interest rate, as well as the effects of these policies, at the next mpm. for the good of japan ’ s economy, it is necessary to make progress in the conversion of people ’ s deflationary mindset that has taken hold amid the prolonged deflation, and we are only halfway to achieving the price stability target. the bank will continue to steadily pursue monetary easing, making full use of all possible measures in terms of the three dimensions of quantity, quality, and the interest rate to achieve the price stability target of 2 percent at the earliest possible time. iv. challenges for japan ’ s economy i would now like to express my thoughts regarding the current situation of japan ’ s economy from a longer - term perspective. japan ’ s potential growth rate, as estimated by the bank, has declined to the range of 0. 0 – 0. 5 percent, and this reflects that the economy has experienced deflation for a long period of time. especially recently, it is common to hear that the future of japan ’ s economy is bleak because of the decrease in population and other factors. similar opinions that arouse anxiety are expressed on an almost daily basis through various channels ; as a result, a vague anxiety hangs over the society. however, i believe that we can be more reassuring about the future of the

bankers ’ speeches ii. keys to assessing the outlook for economic activity and prices in what follows, i will discuss several points that i think deserve particular attention in terms of realizing the outlook that i mentioned earlier. a. employment and income situation first, i will talk about developments in the employment and income situation. supply - demand conditions in the labor market have continued to improve steadily, and employee income has increased moderately. according to the labour force survey, the pace of increase in the number of employees has been accelerating, and the labor force participation – especially that of women and the elderly – has continued to rise. against this backdrop, the active job openings - to - applicants ratio has continued to see a steady rise, and a perception of labor shortage suggested by the diffusion index ( di ) for employment conditions ( the proportion of firms responding that employment was “ excessive ” minus the proportion of those responding that employment was “ insufficient ” ) in the june 2016 tankan ( short - term economic survey of enterprises in japan ) has generally heightened ; both indicators are almost at the same levels as around 1991 – 1992. the unemployment rate has continued on a moderate improving trend, albeit with some fluctuations, and has been in the range of 3. 0 – 3. 5 percent. the supply - demand conditions in the labor market are expected to further tighten. on the wage side, hourly cash earnings of part - time employees in particular, which are responsive to labor market conditions, have continued to show relatively high growth at around 1. 5 – 2. 0 percent. with regard to the outlook, on the back of the heightening of inflation expectations and the marked tightening of labor market conditions, wages are projected to rise moderately. in light of these prospects for employment and wages, employee income is expected to continue rising moderately. base pay for fiscal 2016 was revised upward for a third consecutive year, but to a marginally smaller extent than last year. attention therefore should be given to how funds from profits in the corporate sector will circulate in the economy. b. private consumption i will now discuss developments in private consumption, which has generally maintained its resilience against the background of steady improvement in the employment and income situation, although relatively weak developments have been seen in some indicators. the consumption activity index is heading toward a pick - up, mainly in durable and non - durable goods, albeit with fluctuations. looking at confidence indicators related to private consumption, the consumer confidence index has continued to be more or less flat, while the