s commitment to continue with this provision of ample liquidity until the year - on - year rate of change in the cpi ( excluding fresh food, on a nationwide basis ) registers zero percent or higher on a sustainable basis. this commitment is unprecedented as central bank monetary policy, but stipulating the conditions beforehand has made it possible for market participants to act based on the commitment and that has contributed to boosting the transparency and effectiveness of monetary policy. reviewing the subsequent policy effects, when there were strong concerns about financial system stability, the provision of ample liquidity by the bank, which met financial institutions'liquidity demand, stabilized financial markets and maintained accommodative financial conditions, and contributed to averting a contraction in economic activity. in financial markets, the bank's provision of ample liquidity pushed short - term interest rates down to practically zero percent. longer - term interest rates have remained stably at low levels, because the commitment by the bank has led the market to expect that the short - term interest rates will remain at zero percent when prices continue to decline. now that concerns about financial system stability have subsided substantially and prices are beginning to rise, the commitment is losing its influence on the formation of longer - term interest rates. thus, the effects of the quantitative easing policy are coinciding with the effects of short - term interest rates being at practically zero percent. after the quantitative easing policy is maintained in accordance with the commitment, future monetary policy will follow the path of the processes of " reducing the outstanding balance of current accounts toward a level in line with required reserves, " " maintaining very low interest rates, " and " gradually adjusting interest rates to a level consistent with economic activity and price developments. " in explicating these processes in somewhat greater detail, with respect to the timing for changing the quantitative easing policy framework, the bank will judge whether the year - on - year rate of change in the cpi registers zero percent or higher on a sustainable basis in accordance with the commitment. assuming that developments follow the projection described in the outlook report, the possibility of meeting the conditions of the commitment and of departing from the present monetary policy framework is likely to increase over the course of fiscal 2006. in reducing the outstanding balance of current accounts, the bank will need to monitor financial market conditions carefully, because the outstanding balance of current accounts at the bank has been exceeding substantially the amount of required reserves for a long period of time. up to this point, the outstanding balance of current accounts

are currently rising at a pace slightly below 2 percent year on year, reflecting the increase in crude oil and other international commodity prices and the depreciation of the yen. while the rate of increase is likely to ease, corporate goods prices are projected to continue rising with strong upward pressure. the consumer price index ( cpi ; excluding fresh food, on a nationwide basis ) had been moving slightly below the previous year's levels, but posted a zero percent rise from 2004 in the recently released figures for october 2005. the cpi figures for january through march 2006 are expected to show relatively clear positive year - on - year increases. this is affected by the factors that the negative contribution from lower rice prices has dissipated and the influence from electricity and telephone charge reductions is weakening. in addition, it is affected by the factors that the decline in unit labor costs is shrinking under rising wages, and the gap between supply and demand is narrowing in the japanese economy as a whole, as indicated by the perceptions of a labor shortage in the tankan. the year - on - year changes are expected to remain positive thereafter as japan's economic growth is projected to exceed the potential growth rate. surveys on price developments also indicated that expectations of prices were being revised upward. financial market developments against this background of a positive turn in the outlook for economic activity and prices, net purchases of japanese stocks by foreign investors have been posting record highs, stock prices have risen substantially, and the nikkei 225 stock average recovered the 15, 000 yen level at the beginning of december 2005, the highest level in about five years. meanwhile, the yen has depreciated further in the foreign exchange market, falling to 121 yen to the u. s. dollar in early december and continuing its declining trend against the euro and asian currencies. it is said that the recent depreciation of the yen reflects market participants'view on differentials between japanese and foreign interest rates, given the greater awareness of inflation risk abroad and heightened expectations of higher interest rates. the influence on the economic activity and prices from these financial market developments including the rise in stock prices continues to warrant careful monitoring. the bank's conduct of monetary policy the bank has been maintaining the quantitative easing policy since march 2001. the two pillars of the quantitative easing policy are : the bank's provision of ample liquidity to the money market so that the outstanding balance of current accounts at the bank substantially exceeds the amount of required reserves of about 6 trillion yen ; and the bank '