supply - side constraints that had remained in some areas, such as semiconductors ; as well as ( 4 ) an expected expansion in business fixed investment due to japanese manufacturers transferring their production sites back home and to labor - saving investment to address labor shortages. concerning risks to the outlook, overseas economies and global financial conditions warrant attention. as i mentioned earlier, overseas central banks have so far been raising their policy interest rates at a high pace in order to contain rapid inflation. issues surrounding some financial institutions in the united states and europe since march 2023, however, show that some overseas financial sectors have not necessarily been able to adequately respond to the recent changes in financial conditions ( chart 5 ). such issues have not led to affecting the whole financial system, due in part to swift responses taken by the respective authorities. however, given that global macroeconomic conditions, triggered by the covid - 19 pandemic, have undergone a rapid change from a low - inflation, low - interest rate environment to a high - inflation, high - interest rate environment, there is a risk that some kind of financial shock would occur in an unexpected manner. meanwhile, as high inflation has continued, mainly against the background of wage increases, central banks have not been able to change their monetary tightening stance. such a situation is likely to make policy responses more difficult and create increasing uncertainties for the global economy. b. price developments turning to japan's price developments, the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food continued to rise, exceeding 2 percent in april 2022, reaching 3 percent in september, and 4 percent in december ( chart 6 ). what triggered this inflation was a surge in energy prices that occurred in the process of a global recovery from a downturn caused by the pandemic. moreover, since spring 2022, imported goods prices have risen across the board due to such factors as a further rise in international commodity prices that mainly reflected the situation in ukraine, as well as the yen's depreciation during a situation of high global inflation and rising interest rates. initially, the effects of such factors emerged mostly in the form of a rise in producer prices. however, since last summer, a passthrough of cost increases to selling prices at the retail level has also started to be observed, and moves to raise prices, particularly of food, have rapidly become widespread ( chart 7 ). the year - on - year rate of

minus 0. 1 percent. thereafter, given that market transactions were sluggish because of the narrow range of yield fluctuations, in july 2018, the bank decided that the yields may move upward and downward to some extent, mainly depending on developments in economic activity and prices, with a specific figure of " about double the range of around plus and minus 0. 1 percentage points " in mind. moreover, given the findings of the assessment for further effective and sustainable monetary easing conducted in march 2021, the bank made clear that the range of 10 - year jgb yield fluctuations from the target level would be " between around plus and minus 0. 25 percentage points. " in december 2022, it was further expanded to " between around plus and minus 0. 5 percentage points. " in this way, the bank has been expanding the range of 10 - year jgb yield fluctuations from the target level under the yield curve control policy. this is because, while long - term interest rates need to be kept stable at low levels in order to achieve the 2 percent price stability target, holding down such rates also could affect market functioning. meanwhile, in the case where the range of 10 - year jgb yield fluctuations from the target level is expanded so as to ensure market functioning, long - term interest rates could rise as a result, leading to a less accommodative monetary environment and a delay in economic recovery. the management of 10 - year jgb yield fluctuations therefore needs to be considered based on the judgment of the trade - off between monetary easing effects at a macroeconomic level and effects on market functioning, among others. the bank's decision to expand the range of 10 - year jgb yield fluctuations from the target level in december 2022 also was made based on such judgment. in 2022, as a result of economic recovery in various countries and regions, inflation accelerated and interest rates rose globally. these developments also affected japan, as was seen in the 10 - year jgb yields approaching 0. 25 percent - - the upper limit of the yield curve control policy of the time - - in march 2022. the bank subsequently took measures, such as devising its conduct of jgb purchase operations, and prevented a heightening of long - term interest rates, which potentially could have hindered japan's economic recovery. at the same time, these measures caused marked distortions in the yield curve. the shape of the jgb yield curve, however, is now generally smooth due to the