market operations. under the framework of qqe with yield curve control, japan's economy has continued on an expanding trend and the output gap has remained positive. as for prices, the underlying trend in the year - on - year rate of change in the cpi excluding fresh food and energy has been generally in positive territory for six years. with regard to inflation expectations, the results of the bank's june 2019 opinion survey on the general public's views and behavior showed that, while medium - to long - term expectations remained low, the proportion of respondents who answered that prices would go up one year from now has increased recently, and this indicates a change in people's perception of future prices ( chart 10 ). although there is still some way to go for the core cpi to increase toward the price stability target of 2 percent, it is crucial to resolutely continue with powerful monetary easing under qqe with yield curve control. under these circumstances, in april 2019, the bank partially revised the description of forward guidance for policy rates to, " the bank intends to maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, at least through around spring 2020, taking into account uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike. " this was to make clearer the bank's policy stance that it will resolutely continue with powerful monetary easing toward achieving the price stability target ( chart 11 ). the statement released after the monetary policy meeting held on july 29 and 30 specified that " the bank will not hesitate to take additional easing measures if there is a greater possibility that the momentum toward achieving the price stability target will be lost. " this was to affirm the bank's commitment to preempting any loss of momentum toward achieving the price stability target, particularly where - - mainly arising from developments in overseas economies - - there are significant downside risks to economic activity and prices. on this basis, should the bank be required to examine and implement specific additional easing measures, it will take appropriate action depending on the situation while weighing the positive effects and side effects. b. effects and side effects of monetary easing under a low interest rate environment let me now share my views on the effects and side effects of monetary easing. while recognizing the importance of maintaining the extremely low levels of short - and longterm interest rates toward achieving the price stability target, it also is

bank of japan ’ s november report of recent economic and financial developments1 bank of japan, 19 november 2001 * the bank ’ s view * * adjustments in economic activity are becoming more severe, as the substantial decline in production is beginning to have an adverse effect on private consumption through decreases in employment and income. with regard to final demand, net exports ( real exports minus real imports ) continue to decline, reflecting not only a slowdown in overseas economies but also sluggish demand for it - related goods. business fixed investment also continues to decrease while the deterioration in exporting conditions persists. housing investment remains sluggish and public investment is on a downward trend. moreover, private consumption seems to be weakening gradually. industrial production continues to decline considerably, reflecting these developments in final demand and also strong excessiveness in inventories of electronic parts and materials. corporate profits are deteriorating, particularly in manufacturing, and the weakness in household income is becoming evident amid the decrease in the hours worked and the rise in unemployment. turning to the outlook, as for exporting conditions, the prevailing view is that inventory adjustments in it - related goods worldwide are expected to be mostly completed by around next spring. however, while the world economy has decelerated further since the terrorist attacks in the u. s., final demand of it - related goods is likely to be stagnant for the time being. moreover, if the downturn in u. s. private consumption persists, it may induce another round of adjustments in the japanese economy, starting from the decline in exports such as of consumer goods. meanwhile, with respect to domestic demand, business fixed investment is expected to follow a downward trend, particularly in the it - related sector, amid the decline in corporate profits. private consumption will also continue to be weak along with deteriorating employment and income conditions and the more cautious consumer sentiment. government spending is projected to follow a downtrend at the time when the substantial decline in exports and production is negatively affecting private consumption through the decrease in household income. consequently, it may take quite a while for overall production activity to stop declining, although the decrease in the production of it - related goods may eventually come to an end. overall, adjustments in economic activity, starting from the decline in exports since the beginning of this year, will surely dampen domestic demand further. at the same time, concern that another substantial decline in exports will exert downward pressure on the economy is growing. moreover, while the economy continues to be in