. the year - on - year rate of change in the cpi is likely to be negative for the time being. thereafter, it is expected to turn positive and then increase gradually with the effects of temporary factors that push down prices dissipating and the economy improving ( chart 4 ). at present, the bank judges that prices will not see an overall and sustained decline ; in other words, the economy will not return to deflation. however, attention should also continue to be paid to price developments given that the pace of economic improvement is only moderate and uncertainties over the economic outlook are significant. ii. the bank's conduct of monetary policy monetary policy conduct in response to covid - 19 and financial developments so far, i have talked about developments in economic activity and prices. now, i will explain the bank's thinking behind the monetary policy conduct in response to covid - 19. to address the global shock of covid - 19, governments and central banks around the world have swiftly made policy responses on a large scale. governments have implemented large - scale economic measures including income support and loan guarantees to firms and households. central banks have conducted monetary easing measures, and their responses have two things in common. one is providing support for financing to firms and sole proprietors affected by covid - 19 so that they can sustain their businesses. the other is maintaining stability in financial markets in order to prevent a vicious cycle between turmoil in the markets and deterioration in the real economy. in this regard, the bank has conducted powerful monetary easing since march in response to covid - 19 through the following three measures ( chart 6 ). specifically, the first is the special program to support financing in response to the novel coronavirus ( covid - 19 ) to provide support mainly for corporate financing. the second is an ample and flexible provision of funds, mainly by purchasing japanese government bonds ( jgbs ) and conducting the u. s. dollar funds - supplying operations, to ensure stability in financial markets. the third is active purchases of exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ) to lower risk premia in asset markets. the bank's responses have had positive effects, coupled with the government's measures and active efforts by financial institutions ( chart 7 ). as for financial conditions, although firms'financial positions have been weak, the environment for external funding has remained accommodative. the year - on - year rate of change

december 24, 2020 bank of japan response to covid - 19 and medium - to long - term challenges for japan's economy : with an eye on the post - covid - 19 era speech at the meeting of councillors of nippon keidanren ( japan business federation ) in tokyo kuroda haruhiko governor of the bank of japan ( english translation based on the japanese original ) introduction it is a great honor to have this opportunity to address such a distinguished gathering of business leaders in japan today. for eight years now, i have delivered a speech at this end - of - year meeting, and i can say that this year we have experienced enormous changes in the social and economic environment due to the shock of the novel coronavirus ( covid - 19 ). as we wrap up 2020, i would first like to take a look back at economic developments this year, mainly focusing on the impact of covid - 19, and talk about the outlook for economic activity and prices. then, i will explain the bank of japan's thinking behind its policy responses. in relation to the conduct of monetary policy, i will also touch on the conduct of the assessment for further effective and sustainable monetary easing, which the bank decided at the monetary policy meeting ( mpm ) held last week. lastly, i would like to talk about what is necessary in taking advantage of lessons to be learned from overcoming the current crisis for future growth - - that is, challenges regarding japan's economy as a whole that should be addressed when also looking ahead to the post - covid - 19 era from a medium - to long - term perspective. i. economic and price developments during the covid - 19 era and their outlook impact of covid - 19 on the economy let me start with a look back at economic developments this year, mainly focusing on the impact of covid - 19. covid - 19 started to spread from the beginning of the year and became a pandemic within a short period toward early spring ( chart 1 ). governments around the world took strict and wide - ranging public health measures in order to prevent the spread. under these circumstances, the global economy became depressed significantly. however, since the summer season, as public health measures have been eased, the global economy has picked up from that state of significant depression, as seen in the growth rates of each country turning positive on a quarter - on - quarter basis. similar developments have been observed in japan. the quarter - on - quarter gdp