being given external assets amounting to 250 trillion yen. therefore, unless the trade deficit continues to expand rapidly, the current account is likely to remain in surplus. c. recent price developments next, i will move on to price developments. international commodity prices had been increasing from around spring 2009 on the back of high growth in emerging economies, but weakened slightly around summer 2011 due to the instability in global financial markets and subsequently remained more or less flat. however, most recently commodity prices have been rising again, mainly due to geopolitical risks. import prices in japan and the domestic corporate goods price index ( cgpi ) – which measures fluctuations in prices of goods traded between firms in japan – have been more or less flat, reflecting movements in international commodity prices. meanwhile, the year - on - year rate of decline in the consumer price index ( cpi ) for all items excluding fresh food, or the core cpi – which measures fluctuations in prices of goods and services purchased by households – has slowed consistently since around 2009 as the aggregate supply and demand balance gradually improved, and the year - on - year rate of change is currently around 0 percent, reflecting developments in import prices and the cgpi. as for the outlook, in light of recent developments in the output gap, the year - on - year rate of change in the core cpi is expected to remain at around 0 percent – potentially falling into slightly negative territory – for the time being, albeit with some fluctuations reflecting movements in international commodity prices. bis central bankers ’ speeches d. outlook for economic activity and prices the outlook i just presented is my own personal assessment. let me now turn to the outlook for economic activity and prices, known as the outlook report, which the bank releases semiannually in april and october. the outlook report presents the policy board members ’ assessments of economic activity and prices based on their forecasts. in addition to the semiannual outlook report, the bank releases interim assessments in january and july that present the bank ’ s revised forecasts. in the most recent forecasts, released on january 24, 2012, policy board members considered it most likely that japan ’ s economic activity would remain more or less flat for the time being, but thereafter the economy was likely to return to a moderate recovery path as the pace of recovery in overseas economies picked up, led by emerging and commodity - exporting economies, and as reconstruction - related demand after the earthquake gradually materialized. on the price front, the year - on - year rate

calculations suggest that the fiscal situation in japan is likely to remain severe. to ensure that confidence in japan ’ s public finances is maintained, it is necessary to embark on a path to fiscal sustainability that gives the public reasons to believe that the government can bis central bankers ’ speeches restore fiscal balance in the medium to long term. steps in this direction include a growth strategy to lift the country ’ s growth rate as well as revisions to the social security and taxation systems. turning to the balance of payments, japan ’ s trade balance fell into a deficit of 1. 6 trillion yen in 2011, marking the first deficit since 1963, that is, in 48 years. there are three main reasons for this. first, exports declined sharply due to the supply - side constraints caused by the disaster, while imports of intermediate goods increased to make up for shortages in domestic supplies. second, shutdowns of nuclear power plants led to an increase in imports of crude oil, liquefied natural gas, and other fossil fuels used for thermal power generation. and third, the slowdown in overseas economies and the appreciation of the yen since autumn 2011, as well as the flooding in thailand, weighed down exports. thus, a combination of various factors was behind the trade deficit for 2011. the supply - side constraints and the flooding in thailand are, however, temporary factors and are unlikely to affect exports and imports hereafter. the trade balance in january 2012 also marked a record deficit. according to preliminary data, the deficit was 1. 5 trillion yen, the largest monthly deficit ever since the compilation of comparable data started in 1979. the deficit in large part also reflects a special factor – namely, the decline in exports due to the fact that in 2011 the chinese new year holidays took place in february. the current account balance, which consists of the balance of trade in goods and services, the balance of income, and current transfers, remained in surplus in 2011, although the surplus decreased substantially mainly due to the trade deficit. the services balance records the receipts and payments for international transactions in services, while the income balance records the international receipts and payments of interest and dividends, and current transfers record contributions to international organizations as well as the flow of government food and financial assistance. the current account was in surplus owing to a large surplus in the income balance, which in turn was brought about by increases in interest and dividend payments from direct and portfolio investments. it is very likely that the income balance will remain in surplus for the time