use it as the basis of macroeconomic forecasts for the purpose of policy formulation because empirical research on this topic is still insufficient. while economic policy is implemented based on a critical decision that takes account of more than just economic gains and losses for various economic entities, it is difficult to obtain the consent of stakeholders based on an economic model which considers future inflation to be inevitable but cannot predict when it will occur. actual policy management cannot help being prudent because macroeconomic policy is managed under various constraints - - constraints in terms of legal, accounting, and practical affairs, as well as the need for parliamentary consent - - and because policy authorities need to be strongly conscious of these constraints. because of the limitations of the unconventional monetary policy, fiscal expansion is refocused in the political and academic worlds. my understanding is that this situation occurred because in japan's case, it has been difficult to feel the benefits of economic recovery despite powerful monetary easing measures implemented on an unprecedented scale. in europe's case, this was a reaction to the excessive rise in expectations for monetary policy after awareness about the limitations of fiscal policy grew due mainly to the sovereign debt crisis. in particular, the fact that the global financial crisis that broke out in 2008 was overcome through various unconventional measures has led to misunderstanding that monetary policy is the " only game in town. " in that respect, the recent spread of expectations for fiscal measures reminds me of this lesson : " history repeats itself. " in any case, i feel sympathy with the fact that an orthodox strategy of strengthening growth potential through structural policy while buying time by providing cyclical support for the economy through collaboration of fiscal and monetary policies has started to gain some support not only in japan but globally, because the strategy has something in common with the concept of the " three - arrows " strategy that was launched soon after the inauguration of the abe administration. under these circumstances, the central bank's role is ultimately generating the maximum effects of the fiscal and structural policies by maintaining accommodative financial conditions. within the scope of this role, the bank is conducting unprecedented monetary policy, namely, controlling the yield curve. the prerequisite for the control of the long - term interest rate is that the credibility of the jgb market is maintained through the government's efforts toward establishing a sustainable fiscal structure. if fiscal discipline weakens as a result of the bank guiding the long - term interest rate to around 0 percent, it is possible that the credibility of fiscal management will be

9 to + 1. 9 [ + 0. 9 ] [ + 1. 7 ] notes : 1. figures in brackets indicate the median of the policy board members'forecasts ( point estimates ). 2. the contribution of energy items to the year - on - year rate of change in the cpi ( all items less fresh food ) is estimated to be approximately minus 0. 6 percentage point for fiscal 2016 and reach around 0 percentage point in early 2017, becoming slightly positive thereafter. source : bank of japan. japan's economy : real gdp s. a., q / q % chg. s. a., q / q % chg. q3 q4 q1 a q2 - 1. 8 - 0. 2 0. 6 1. 4 - 0. 1 inventories b 1. 0 - 0. 4 - 0. 2 imports c 0. 8 - 0. 3 - 0. 2 - 0. 1 final demand d = a - b - c - 3. 6 0. 5 1. 0 - 1 real gdp e - 1. 8 - 0. 2 trading gains / losses f 0. 2 - 2 real gdi g = e + f - 3 income from / to the rest of the world h 0. 1 real gni i = g + h - 1. 4 real gdp private demand - 4 0. 6 q2 q3 q4 q1 q2 q3 q4 0. 2 - 0. 3 0. 6 0. 4 0. 3 0. 2 0. 4 - 0. 2 - 0. 1 - 0. 2 0. 2 - 0. 3 - 0. 1 0. 5 - 0. 5 0. 1 0. 2 0. 2 0. 0 - 0. 2 0. 9 - 1. 0 0. 9 - 0. 3 0. 6 0. 0 0. 6 0. 5 0. 6 1. 4 - 0. 1 0. 2 - 0. 3 0. 6 0. 4 0. 3 0. 2 0. 1 0. 3 0. 8 0. 1 0. 3 0. 1 0. 5 0. 2 - 0. 1 - 0. 2 - 1. 6 - 0. 1 0. 9 2. 2 0. 0 0. 5 - 0. 2 1. 1 0. 6 0. 3 0. 4 - 0. 4 0. 3 0. 0 0. 2 1. 3 1