statement by kuroda haruhiko, governor of the bank of japan, concerning the bank's semiannual report on currency and monetary control before the committee on financial affairs, house of councillors, on june 7, 2022 introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy has picked up as a trend, although some weakness has been seen in part, mainly due to the impact of the novel coronavirus ( covid - 19 ) and a rise in commodity prices. overseas economies have recovered on the whole, albeit with variation across countries and regions. in this situation, exports and industrial production have continued to increase as a trend, despite the remaining effects of supply - side constraints. corporate profits have improved on the whole, but business sentiment has seen a pause in its improvement recently, mainly due to the impact of covid - 19 and the rise in commodity prices. business fixed investment has picked up, although weakness has been seen in some industries. the employment and income situation has remained relatively weak on the whole, although improvement has been seen in some parts. private consumption has started picking up again, with downward pressure stemming from covid - 19, particularly on services consumption, waning. with regard to the outlook, although japan's economy is expected to be under downward pressure stemming from the rise in commodity prices due to factors such as the situation surrounding ukraine for the time being, it is likely to recover, with the impact of covid - 19 and supply - side constraints waning and with support from an increase in external demand, accommodative financial conditions, and the government's economic measures. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food has accelerated to around 2 percent due to a significant rise in energy prices, with much of the impact of last year's reduction in mobile phone charges dissipating. the rate of increase is expected to stay at around 2 percent for the time being, mainly due to the positive contribution of the rise in energy prices to the cpi, but is projected to decelerate thereafter because the contribution is likely to wane. meanwhile, the year -

end of this october, the bank reduced the target to 0. 3 percent, and it was further reduced to 0. 1 percent last week. the federal reserve, last week, also reduced its target for the federal funds rate, and set the interest rates on required and excess reserve balances at 0. 25 percent. at the same time, the federal reserve announced that the exceptionally low level of the federal funds rate will continue for some time. when interbank overnight interest rates are lowered this far, meaningful policy in terms of stimulating demand through interest rates shifts toward easing firms'accessibility of funds. this holds true in both japan and the united states. in this sense, measures that will ensure stability in financial markets and maintain an environment to extract maximal monetary easing effects are extremely important. in this area, the bank implemented u. s. dollar funds - supplying operations soon after the bankruptcy filing of lehman brothers as a coordinated measure among the central banks in major economies, and has been supplying sufficient dollar funds ever since. these operations are currently being conducted without limitation on the amount, as long as it is within the value of collateral. as a result, dollar funding rates have declined, mainly for shorter terms, and these operations are supporting economic activity by relieving the funding concerns of japanese firms through reducing the dollar funding pressures among financial institutions. with regard to yen funds, the complementary deposit facility has been introduced to enable smooth and sufficient provision of funds, and funds for over the year - end have been provided in larger amounts than a year before. although the influence of intensified tensions in the global financial markets is being felt in japanese markets in the form of large fluctuations in stock prices and a widening of credit spreads in the corporate bond market, japanese financial markets have still been relatively stable compared to u. s. and european markets, in part because of the swift money market actions taken by the bank. in addition, at the monetary policy meeting held last week, the amount of outright purchases of jgbs was increased from 14. 4 trillion yen per year to 16. 8 trillion yen per year. this is to supply longerterm funds and resolve the problem of having to conduct frequent short - term funds supplying operations, thereby facilitating smooth money market operations. along with money market stabilizing measures, the bank has introduced various measures to support corporate financing with a view to extracting maximal monetary easing effects. in advanced economies, the parties that extend credit directly to firms are private financial institutions and investors, and the