is that we have two target rates. the short - term policy interest rate is set at minus 0. 1 percent and the target level of the 10 - year japanese government bond ( jgb ) yields at around 0 percent. we are buying a necessary and sufficient quantity of jgbs to maintain the rate targets. i think the policy has been quite effective. the left panel in slide 14 shows that japan's yield curve generally stays lower than those in the united states and germany. a comparison with the german yield curve reveals that, while shorter rates are lower in germany, long - term rates are kept lower in japan than in germany. the right panel compares 10 - year bond yields in the major economies. while the u. s. treasury rates moved up after the presidential election in november 2016, dragging the german bunds rates in the same direction, the jgb yields remained at lower levels under ycc. i now turn to economic and inflation development in japan to show that the monetary policy has worked quite effectively. slide 15 provides the bank of japan's latest economic and inflation outlook. as you see in the table, japan's economy is forecast to grow 1. 9 percent in fiscal 2017 and 1. 4 percent in fiscal 2018. this is well above japan's potential growth rate, which is estimated to be around 0. 8 percent. therefore, the output gap is expected to improve further into positive territory. this is supposed to exert upward pressure on prices. however, on the inflation front, consumer price index ( cpi ) inflation rates remain weak and are only expected to reach 1. 8 percent in fiscal 2019, still falling short of the price stability target of 2 percent. in the meantime, the economy has never been better balanced in the recent past. as we see in the left panel of slide 16, corporate profits have climbed to record high levels. the labor market is very tight with the unemployment rate, shown in the middle panel, all the way down to 2. 7 percent, which implies full employment. meanwhile, job opening rates, as shown in the right panel, rose to historically high levels. so, the question is why the prices are so weak when the macroeconomic fundamentals are so favorable. as a matter of fact, this may be a common question to be asked of the economies of the united states and the euro area. my answer to the question in japan is that, against the backdrop of acute labor shortage, corporate firms in japan are trying to

in a certain kind of environment, ” and goes on to say that their time may have passed. 7 central banks could not prevent the bubble and the following crisis. nevertheless, as i have explained today, the role of central banks has evolved over the years and that process is continuing or has even accelerated after the great financial crisis. our economic system, while bringing us unprecedented prosperity, is an inherently unstable creature because of its dynamism. if the peoples of the world are to maintain, let alone further improve, their current lifestyles, policy makers, including central banks, must not let the various currents unleashed by the crisis threaten the foundations of an affluent society. in an ideal world, if we could understand and model why you decided to have latte instead of espresso this morning, it could be possible to design an automatic stabilizing mechanism for the economy, and central banks would become only a chapter in economic history books. nevertheless, being a complex system that involves people and their emotions, managing the economy will probably remain an art rather than a science, where human actors, who can learn from the past and adapt accordingly, have to play a leading role. automatic stabilizers and mechanical rules would not work. continuing this process of learning and adapting, i believe, is at the core of the challenges facing central banks at this juncture, and if central banks can meet those challenges, central banks will still be able to fully serve the good society. thank you very much. see shiller, robert j., finance and the good society, princeton university press, 2012. bis central bankers ’ speeches