rates and a reduction in various risk premiums. specifically, the bank announced that it would ( 1 ) continue its virtually zero interest rate policy of encouraging the policy interest rate to remain at around 0 to 0. 1 percent ; and ( 2 ) implement the asset purchase program ( hereafter the program ) mainly through the purchase of various financial assets, such as government securities, commercial paper ( cp ), corporate bonds, exchange - traded funds ( etfs ), and japan real estate investment trusts ( j - reits ). since the establishment of the program in october 2010, the bank has expanded its size successively. after the start of 2012, the bank increased it in february and april, and the bis central bankers ’ speeches outstanding amount of the asset purchase is to reach about 65 trillion yen by around the end of 2012 and about 70 trillion yen by around the end of june 2013. the outstanding amount of the program stands at approximately 51 trillion yen as of june 10, and thus the bank will increase it by approximately 14 trillion yen – at a pace exceeding 2 trillion yen per month on average – by the end of this year. the amount of the bank ’ s purchases of assets, including those of japanese government bonds ( jgbs ) conducted regularly at the pace of 1. 8 trillion yen per month, will total as much as 4 trillion yen per month on average. due to such pursuit of powerful monetary easing, market interest rates in japan have been moving at an extremely low level. for example, yields on jgbs with maturities of up to three years have been at around 0. 1 percent, which is almost equivalent to money market interest rates, and those on ten - year jgbs have been below 0. 9 percent. in these circumstances, firms ’ funding costs, as measured by lending rates, and credit spreads in corporate bond and cp markets, have both been moving at low levels. these rates, unlike those in the european and u. s. markets, have been stable at low levels even when market concerns about the european debt problem intensified significantly. the bank will continue to pursue powerful monetary easing with the aim of achieving the goal of a 1 percent year - on - year rate of increase in the cpi so that firms and households can gain easier access to loans at a lower interest rate. b. the bank ’ s efforts to strengthen the foundations for economic growth i will now talk about the fund - provisioning measure to support strengthening the foundations for economic growth ( here

bank of japan ’ s december report of recent economic and financial developments1 bank of japan, communication 21 december 1999. * * * the bank ’ s view2 japan ’ s economy, which had stopped deteriorating, has recently started to improve, with exports and production increasing. the economic environment surrounding private demand is gradually improving, as seen in the continuing increase in corporate profits. however, clear signs of a selfsustained recovery in private demand have not been observed yet. with regard to final demand, housing investment has recently peaked out, and public investment seems to have stopped rising. recovery in private consumption continues to be weak through lack of notable improvements in employment and income conditions. business fixed investment, which had been on a downward trend, shows signs of leveling off. meanwhile, net exports ( real exports minus real imports ) continue to expand due to an upturn in overseas economies. reflecting such developments in final demand and continued progress in inventory adjustment, industrial production remains on an uptrend and an increase in corporate profits is becoming distinct. in this situation, corporate sentiment continues to improve. regarding the employment condition, there are some indicators that suggest a slowdown of decrease in the number of employees. the positive developments in corporate profits and sentiment, however, have not necessarily stimulated business activities, because firms still strongly feel that they have excess capacity and employees and that they should reduce their debts to restore financial soundness. in addition, efforts by firms to reduce personnel expenses have prolonged the severity of households ’ income conditions. as for the outlook, improvements in the overall financial environment partly due to the monetary easing by the bank, along with a series of economic measures taken by the government, are expected to continue underpinning the economy. moreover, the positive impact on domestic production of the recovery of overseas economies, especially of asian economies, is likely to continue for some time and have favorable effects on corporate profits and then on household income. by contrast, it is highly probable that housing investment will remain flat for the time being. in addition, firms are expected to maintain a cautious stance toward business fixed investment based on their modest prospects for sales, although corporate restructuring is improving profitability to some extent. moreover, it seems that the appreciation of the yen since the summer will have an adverse effect on corporate profits in the near term. in these circumstances, future economic developments still require careful monitoring in spite of the gradual recovery in the environment for private demand. furthermore, it is important to promote structural reform in order to facilitate