developments toward such a virtuous cycle may be appearing, but it has not yet taken hold. therefore, the bank should patiently continue with monetary easing for the moment. furthermore, as in the past statements on monetary policy, the bank presented in its statement released immediately after the october mpm that it will continue expanding the monetary base until the year - on - year rate of increase in the observed cpi for all items less fresh food exceeds 2 percent and stays above this target in a stable manner, and it will not hesitate to take additional easing measures if necessary. monetary policy measures remain well prepared to combat downside risks to economic activity and prices. it is thus clear that the bank's decision at the october mpm to further increase the flexibility in the conduct of yield curve control did not aim at normalizing monetary policy. to sum up, the three rounds of modifications to increase the flexibility in the conduct of yield curve control, including the one decided at the october mpm, did not intend to lay the groundwork for an exit from monetary easing. rather, i would like to emphasize that the modifications aimed at continuing with accommodative monetary policy to achieve the price stability target. informational value of long - term interest rates formed in financial markets next, i would like to express my thoughts on the significance of continuously increasing the flexibility in the conduct of yield curve control. conventional monetary policy, in my understanding, involves controlling short - term policy interest rates and communicating with financial institutions through day - to - day market operations, to form a perception of optimal interest rates to ensure stability in economic activity and prices. in this context, long - term interest rates are an indicator reflecting market participants'outlook for monetary policy as well as the results of their comprehensive assessment of developments in and prospects for economic activity and financial market conditions at home and abroad. long - term interest rates are thus regarded as an extremely informative indicator in conducting monetary policy. given these considerations, the framework of yield curve control, in which a central bank controls long - term interest rates more directly, carries the disadvantage of losing the valuable information provided by such rates. the bank's decision to introduce yield curve control, despite this disadvantage, was based on its judgment that a framework for continuing with powerful monetary easing is necessary to achieve the price stability target of 2 percent. however, amid the ongoing elevated inflation that started during the pandemic, i believe the room for making effective use of the informational value pertaining to long -

economic outlook for overseas economies continues to require attention, given that there are some uncertain factors including geopolitical developments and their economic implications. on the domestic side, stock prices are weak. hence, careful monitoring is required of progress in the resolution of the nonperforming - loan problem and its effects on stock prices, corporate finance, and the economy. on the price front, import prices are on a rising trend with some fluctuations, reflecting developments in overseas commodity prices such as crude oil. domestic corporate goods prices have been declining gradually due to the rise in import prices and the improved supply - demand balance in materials industries, despite the continued fall in machinery prices. consumer prices and corporate services prices have also been declining gradually. looking at the conditions influencing price developments, import prices are projected to be firm for the time being due mainly to developments in crude oil prices. although the low levels of inventories will this report is based on data and information available at the time of the bank of japan monetary policy meeting held on february 13 and 14, 2003. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on february 13 and 14, 2003, as the basis for monetary policy decisions. support prices to some degree, the overall condition of supply and demand is expected to continue exerting downward pressure on prices while domestic demand continues to be weak for a while. moreover, factors such as the ongoing technological innovations in machinery and the streamlining of distribution channels will continue to exert downward pressure on prices. under these circumstances, domestic corporate goods prices are likely to continue a gradual decline for the time being. the pace of year - on - year decline in consumer prices is expected to become somewhat slower. this is because the year - on - year change in prices of petroleum products is expected to become positive, and medical costs are projected to rise from april due to public insurance reforms. as for the financial environment, the outstanding balance of current accounts at the bank of japan is recently moving at around 20 trillion yen, as the bank provides ample liquidity. under these circumstances, in the short - term money markets, the overnight call rate continues to hover at very close to zero percent. moreover, longer - term interest rates continue to be at low levels as a whole. yields on long - term government bonds declined further in late january and are recently moving in the range of 0. 8 - 0. 9 percent. yield spreads between private bonds ( bank