the other hand, because central banks confront a constantly changing world, in practice, they often face difficulties that cannot be explained by existing theories. when the bank introduced large - scale jgb purchases and yield curve control, it took the limitations and issues suggested by theory into account, carefully investigated the merits and demerits of addressing those issues, and arrived at the current policy framework. i believe that such new steps in practice eventually will lead to new theoretical developments in the future. although there remain issues to be resolved to achieve the price stability target of 2 percent, the environment surrounding prices in japan has improved steadily compared to five years ago. i am convinced that this shows that the bank's efforts based on the economic theories underpinning qqe have been going in the right direction. going forward, with the output gap improving steadily, firms'stance is likely to gradually shift toward raising wages and prices. if further price rises come to be widespread, inflation expectations are likely to rise steadily. the bank will continue to persist with powerful monetary easing to ensure that such positive developments are not cut short. thank you for your attention. kurt lewin, " the research center for group dynamics at massachusetts institute of technology, " sociometry, vol. 8, no. 2 ( 1945 ) : 126 - 136. quantitative and qualitative monetary easing and economic theory speech at the university of zurich in switzerland november 13, 2017 haruhiko kuroda governor of the bank of japan chart 1 consumer prices and policy interest rates % cpi ( all items less fresh food ) policy interest rates - 1 - 2 - 3 cy 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 notes : 1. the cpi figures ( y / y % chg. ) are adjusted for changes in the consumption tax rate. 2. for the period when no target interest rate was adopted, figures for the policy rate are the interest rate applied on excess reserves. sources : ministry of internal affairs and communications ; bank of japan. chart 2 potential growth rate y / y % chg. total factor productivity capital input labor input potential growth rate - 1 - 2 fy 85 note : based on boj staff estimations. figures for the first half of fiscal 2017 are those for 2017 / q2. source : bank of japan. chart 3 monetary policy responses and developments in real gdp after the global financial crisis real gdp

2008, while the european central bank announced it would keep its main rates at current or lower levels at least through mid - 2020. this should sustain favourable financial conditions for longer than expected, as well as capital inflows to emerging markets. as monetary easing by leading central banks appeared more certain and positive macroeconomic developments at home continued, the national bank of serbia decided to lower the key policy rate in two instances, july and august, by 25 bp each, to 2. 5 %, i. e. its lowest level in the inflation targeting regime yet. thus, in conditions of subdued inflationary pressures, the national bank of serbia continued to provide additional support to economic growth and a sustainable rise in employment. as so far, monetary policy decisions will continue to be made in consideration of the effects of past monetary easing on the future inflation profile, as well as of the effects of other domestic and external factors. given that the key risks to the projection are still mostly associated with the international environment, the national bank of serbia will keep a close eye on developments in the international commodity and financial markets and assess their impact on economic movements in serbia. as before, monetary policy will be predictable and consistent in delivering low and stable inflation in the medium term. this will at the same time help maintain macroeconomic and financial stability and contribute to sustainable economic growth. owing to this, there is a constant rise in the number of domestic and foreign investors who are investing at a longer horizon, having recognised the stability and prospects of our economy. current economic trends and the results achieved thus far are a good basis for further sustainable and dynamic economic growth. this is confirmed by our latest projections and key macroeconomic developments, which will now be presented to you in detail by our colleagues from the economic research and statistics department.