central bankers ’ speeches a. growth potential of japan ’ s economy now let us look at 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. according to the bank ’ s estimates, the rate has recently been in the range of 0 to around 0. 5 percent, and thus remains at a low level. the potential growth rate is unlikely to rise markedly in the short term, considering, for example, that the pace of firms ’ accumulation of capital stock remains moderate, although business fixed investment has turned to an increasing trend. on the other hand, the bank ’ s estimates of the output gap in japan have generally been at the neutral level of around zero recently. the output gap is also at a favorable level on an international comparison using the estimates made by the organisation for economic co - operation and development ( oecd ). labor market conditions remain very tight. of course, such estimates are subject to a considerable margin of error. however, if, under these circumstances, the economy continues to grow at a pace well above the potential growth rate, supply - side constraints such as labor shortages will become more pronounced. in my view, stable economic and price conditions are most likely to be maintained, as japan ’ s economy will probably continue growing moderately at a pace that does not diverge considerably from the potential growth rate. b. the decline in crude oil prices and the global economy the decline in crude oil prices facilitates income transfers from oil - producing countries to oilconsuming countries. the net effect of the decline will likely tend to be positive in terms of the global economy as a whole due to the difference in price elasticity of demand between these countries. nevertheless, financial markets often shift to a “ risk - off ” mode. this is probably because the decline in crude oil prices is associated with signs of oil - producing countries ’ currency depreciation and of the heightening in their economic and fiscal risks. another reason seems to be that market participants are still uncertain about the extent of positive effects stemming from the crude oil price decline. in measuring the extent of these effects, the degree to which the decline in crude oil prices will benefit the u. s. economy warrants attention. in this regard, the decline in such prices might not push up private consumption by as much as anticipated due to structural changes in the united states such as an increase in energy efficiency. the fall in crude

conditions and, ultimately, to stimulating growth and inflation dynamics. our analysis shows that the introduction of last september ’ s package is underpinning favourable financing conditions for all sectors of the economy. in turn, lower financing costs for households and firms are supporting consumer spending and business investment. this will sustain the euro area expansion, the build - up of domestic price pressures and, thus, the robust convergence of inflation on our mediumterm aim. in any case, the latest data for the euro area show that, after some stabilisation of the growth dynamics in q3, activity remains subdued and fragile, with 0. 1 % gdp growth in q4 and with french and italian growth rates in negative territory. in the same vein, after some improvement in the balance of risks to the euro area growth outlook, since some of the uncertainty surrounding international trade seems to be receding, the coronavirus outbreak in china – with a negative impact on the global economy that is still difficult to estimate – has compounded other geopolitical factors and vulnerabilities in emerging markets, keeping this balance of risks on the downside. in this context, monetary policy is expected to remain highly accommodative for a prolonged period of time. this aims to support a firm recovery in inflation towards our medium - term objective. our forward guidance on the key ecb interest rates will ensure that financial conditions adjust in accordance with changes to the inflation outlook. and, in any event, the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with our commitment to symmetry. in this context of “ low growth ”, “ low inflation ” and, as a result, “ low for longer ” interest rates scenario, other policies – in particular, macroprudential policy and micro supervision – will have to remain vigilant and poised to address and mitigate any future forces posing a challenge to financial stability. such challenges relate, in particular, to the potential consequences of the “ low for longer ” scenario on the profitability of financial intermediaries in general, and of banks in particular, and on their attitude towards risk - taking. in addition, financial intermediaries are now facing a number of relatively new sources of uncertainty, including the simultaneous rise of new regulations, technologies and market players, against a backdrop of rising environmental, social and governance ( esg ) concerns. along with these novel factors,