following points. first, although the economy is no longer in deflation in the sense of a sustained decline in prices, the cpi has not reached the price stability target of 2 percent. second, people's mindset and behavior based on the assumption that prices will not increase easily have been deeply entrenched under prolonged deflation, and it will still take a long time for such mindset and behavior to change. in addition, the findings also confirm that monetary easing could have a cumulative negative impact on financial institutions'profits as well as on the investment income of life insurance companies and pension funds, which in turn could adversely affect the functioning of financial intermediation. as a policy response based on these findings of the comprehensive assessment, the bank introduced yield curve control in september 2016. through this framework, it controls policy interest rates to appropriate levels while taking into consideration both the positive and side effects of monetary easing. also, in july 2018, the bank, with a view to persistently continuing with powerful monetary easing, shifted to more flexible market operations and asset purchases so that long - term interest rates may move upward and downward to some extent and the amounts of its etf and j - reit purchases may increase or decrease depending on market conditions. the upcoming assessment of monetary easing measures is driven by the same motivations as the comprehensive assessment. the current framework of qqe with yield curve control has been working well for about four years since its introduction, including the covid - 19 era. the bank, under this framework, will assess whether operational practices and the policy tools, including various asset purchases, have had their intended effects. furthermore, because monetary easing inevitably will be prolonged due to the lingering impact of covid19, the bank is open to any options in pursuit of further effective and sustainable monetary easing. as the findings of the assessment are scheduled to be made public at the march mpm, i cannot draw any conclusions in advance. however, let me express my views on etf purchases. in japan, based on past experience, a destabilization of the stock market tends to bring about a deflationary mindset. given this unique factor, i think etf purchases have been effective in dispelling such mindset and will continue to be a necessary policy tool. that said, it is necessary to bear in mind that large - scale purchases and prolonged holding of assets - not limited to etfs - - could affect market functioning. while i will continue to consider

bank of japan ’ s may report of recent economic and financial developments1 bank of japan communication, 21 / 5 / 98. the bank ’ s view2 japan ’ s economy remains stagnant with continued strong downward pressures on economic activities. with respect to final demand, public - sector investment seems to have bottomed out. however, growth in net exports has virtually peaked out as exports to other asian countries decline. business fixed investment has been on the decline. private consumption shows no sign of recovery although the deterioration has slowed. housing investment remains weak. against the background of weak final demand, inventories have accumulated further and industrial production continues to decline. as a result, not only corporate profits but also employment and income conditions have worsened significantly. the above indicates that production, income, and expenditure show negative interactions with one another. in these circumstances, the economic stimulus package was decided, and the fiscal 1998 supplementary budget bill was submitted to the diet. these measures are expected to boost demand through additional fiscal expenditure and special income tax - reduction and thereby alleviate the downward pressures on the economy. in order for the japanese economy to resume a self - sustained recovery, improvements in corporate and household confidence are vital. hence, the overall economic activity and the effects of the economic stimulus measures should be carefully monitored. with regard to prices, wholesale prices continue to fall, and the year - to - year increase in consumer prices ( excluding the effects of institutional changes such as the rise in the consumption tax rate ) has been declining close to zero. as for the future, the downward pressure on domestic prices, induced by the decline in import prices including overseas commodity prices, is weakening. also, the expansion in the output gap in the economy is expected to slow as the economic stimulus package is implemented. in the immediate future, however, prices are likely to weaken reflecting the present high inventory level and the relatively large output gap. in the financial markets, both long and short - term interest rates followed a declining trend with the releases of weak economic indicators. yields on long - term government bonds have recorded a historical low and stock prices remain soft. the yield differential between bonds issued by the private sector and those by the government, as well as the so - called “ japan premium ”, has remained at the relatively high level and shown no significant decrease, indicating the continuing cautious attitudes of market participants toward credit risk. with respect to monetary aggregates, the growth in m2 + cds, which had picked up from the end of 1997, slowed