cpi inflation rate ( excluding fresh food ) turned positive in june for the first time in 14 months, accelerating to plus 0. 8 percent. the outlook for economic activity and prices has improved and stock prices have risen by more than 30 percent since the beginning of the year. while these should be factors that lead to increases in long - term interest rates, japan ’ s long - term interest rates have declined from about 0. 8 percent as of the beginning of the year to less than 0. 7 percent. these rates have declined since end - may, even in a situation of long - term interest rates in the united states and many other countries having substantially increased across the board. the break - even inflation rate and expected inflation rates judged from various surveys have been increasing. thus, the qqe has been exerting its intended effects and japan has been steadily moving toward overcoming deflation. concluding remarks the qqe is an unprecedented policy, in that it aims to increase inflation expectations in a situation where there is no room to further reduce nominal interest rates. while this is a daunting challenge, developments thus far have been encouraging. with the aim of achieving the 2 percent price stability target, the boj will continue with the qqe as long as it is necessary for maintaining that target in a stable manner. thank you for your attention. bis central bankers ’ speeches

of business sentiment. the yen ’ s appreciation has various merits, including reduction in import costs. nevertheless, it might be difficult even for domestic demand - oriented firms, which are supposed to benefit from the yen ’ s appreciation, to step out and take positive action utilizing the merits in the current situation, in which they struggle to visualize future growth. uncertainty about the future of the economy will, to some degree, put a brake on firms ’ current economic activity. in that sense, medium - to long - term economic developments and firms ’ views on those developments are reflected in the current economic activity. keeping those points in mind, from a somewhat longer - term perspective, i will review developments in japan ’ s economy and consider the agenda for its revival. ii. medium - to long - term agenda for japan ’ s economy downtrend in economic growth rate japan ’ s economy achieved a high real growth rate of an average of about 10 percent during the high - growth period. while the growth rate subsequently declined, a relatively high average growth rate was maintained at about 5 percent in the 1970s and 4 – 5 percent in the 1980s. it fell substantially to around 1. 5 percent in the 1990s and further to less than 1 percent in the 2000s ( chart 2 ). such decline in the economic growth rate is partly attributable to the ending of japan ’ s process of catching up with advanced economies, which had continued since the high - growth era, and a decrease in the working - age population associated with progress in aging. even when the population of workers declines, if added value earned by a worker, namely, labor productivity increases, the growth potential of the economy as a whole can be maintained. however, as economic globalization has been progressing rapidly since the 1990s and emerging economies have become rivals, japan ’ s economy has not been able to adapt sufficiently to such a changing environment and japanese firms ’ international competitiveness and productivity have declined. for two major reasons japanese firms were bis central bankers ’ speeches unable to adapt to the changing environment. first, the effects of the bursting of the bubble overlapped. japanese firms were busy resolving “ three excesses ” of debt, employment, and business capacity that had piled up during the bubble period, and did not have leeway to pursue proactive economic activity. second, economic structural reform was delayed, namely, labor and capital did not smoothly move from low - productivity areas to high - productivity areas. in the case of japan, aggressive fiscal and monetary