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

where the economy enters a phase in which the negative output gap almost closes, it is considered that it becomes more difficult for the economy to grow at a pace well above its potential compared with the early stage of economic recovery when the output gap is wide. i also consider the possibility that supplyside constraints such as labor shortages will have the effect of constraining economic activity. based on these developments, as i will describe in more detail later, my assessment is that the economy will continue to grow at a moderate pace as a trend through fiscal 2017, which is roughly equivalent to its growth potential, and that – although lower than the policy board members ’ baseline scenario in the july interim assessment – stable economic activity and prices will be maintained. this is because the cumulative effects of qqe will continue to exert a positive impact on the economy, while on the demand side of the economy, there is downward pressure on exports, business fixed investment, and private consumption. b. overseas economies and japan ’ s exports the latest forecasts for global economic growth for 2015 released by international organizations such as the international monetary fund ( imf ) were revised downward from those made at the end of last year. this was mainly due to weaker - than - expected growth in the united states and china, which are japan ’ s major trading partners. the u. s. economy has been picking up on the whole, after being sluggish in the januarymarch quarter of 2015, reflecting effects such as of the severe winter weather and the labor disputes at west coast ports. however, the sluggishness remains, particularly in private consumption. the average growth rate in the first half of 2015 fell below the past trend, and it is still uncertain whether the pace will recover in the second half. if the growth in labor productivity continues to follow a downtrend, this would increase anticipation of a downward deviation in the growth trend, and an optimistic view on the economic outlook consequently would seem unlikely to spread on the basis of support from a favorable employment situation bis central bankers ’ speeches alone. meanwhile, the growth in the chinese economy has also continued to trend downward, and considering the deterioration in the employment situation and the decline in the inflation rate, it cannot necessarily be said that the economy is currently in a stable condition that is neutral to the output gap. the rate of economic growth appears to be slowing faster than the rate of decline in potential growth. as for asian economies with vulnerabilities arising from the high -