today, within the limited time provided, i would like to introduce particularly important measures ( chart 11 ). first, the bank decided to strengthen its commitment to achieving 2 percent inflation by introducing forward guidance for policy rates. you may not be familiar with the term, but forward guidance is a measure that guides the future policy path in order to strengthen market confidence and expectations toward monetary policy. at the latest mpm, the bank publicly committed to " maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in october 2019. " i would like to reiterate that, even though the projected timing of reaching 2 percent inflation has been delayed, the bank will not reduce the degree of monetary easing. second, the bank decided to implement several measures to enhance the sustainability of " qqe with yield curve control. " for example, while the target level of 10 - year jgb yields is around zero percent, as i mentioned earlier, the bank made it clear that, under the target, the long - term yields might move upward and downward to some extent mainly depending on developments in economic activity and prices. recently, there is a growing concern in the jgb market that the market functioning has been deteriorating, with the long - term yields being somewhat stuck and the transaction volume being on a declining trend, although this can be regarded in a sense as the consequence of powerful monetary easing. in continuing with monetary easing, the bank judged it necessary to allow the long - term yields to move upward and downward to some extent mainly depending on developments in economic activity and prices, thereby maintaining the market functioning so as not to create more concern. however, the target level of the long - term yields remains at around zero percent. in case of a rapid increase in the yields, the bank will purchase jgbs promptly and appropriately. the bank does not expect the level of yields ratcheting up. in addition, as for etf purchases, from the same aspect of enhancing the sustainability of the current monetary policy framework, the bank made it clear that it might increase or decrease the amount of purchases depending on market conditions, while maintaining the annual pace of increase at about 6 trillion yen. the aim of these policy measures is to strengthen the sustainability of the current powerful monetary easing, taking into account the side effects. the bank recognizes that the effects of monetary easing

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 continue to rise reflecting the firmness in oil prices and depreciation of the yen from summer to autumn 2002. the decline in domestic corporate goods prices has become slower due to the rise in import prices and the improved supply - demand balance in materials industries, despite the continued fall of machinery prices. consumer prices remain on a gradual downtrend and corporate services prices continue to decline. looking at the conditions influencing price developments, import prices are likely to be level because the effect of the rise in oil prices will be offset by that of the recent appreciation of the yen. although this report is based on data and information available at the time of the bank of japan monetary policy meeting held on january 21 and 22, 2003. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on january 21 and 22, 2003, as the basis for monetary policy decisions. the low levels of inventories will support prices to some degree, the overall condition of supply and demand is expected to continue exerting downward pressure on prices for a while amid persistently weak domestic demand. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the streamlining of distribution channels will continue to exert downward pressure on prices. under these circumstances, domestic corporate goods prices are expected to be weak for a while. consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. the increase in imports of consumer goods has come to a halt and this is expected to alleviate the downward pressure on prices to some extent, but the faster pace of decline in wages may reinforce the ongoing decline in prices, especially that in services prices. as for the financial environment, the outstanding balance of the 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 and are recently moving