financial crisis were accumulating. in that regard, the bank introduced a framework for assessing the economic and price situation from two perspectives – a baseline scenario of the outlook for economic activity and prices, and risk factors and, on that basis, it conducts monetary policy. the framework was adopted by incorporating the merits of other countries ’ policy conduct frameworks, including the aforementioned inflation targeting, and also paid due consideration to the demerits. and thus, the bank believes that its policy framework is a more advanced one for monetary policy. based on such line of thinking, the bank, in clarifying the policy time horizon, confirmed that the criterion for continuing the virtually zero interest rate policy is the “ understanding of medium - to long - term price stability, ” and the policy will be continued on condition that no problem will be identified in examining risk factors, including the accumulation of financial imbalances that could threaten economic and price stability from a long - term perspective as the conditions. establishment of an asset purchase program the third measure is to establish a program for carrying out, for example, asset purchases. in order to aim at a decline in longer - term market rates and a reduction in various risk premiums, the bank decided this time to purchase a variety of financial assets. specifically, as a temporary measure, the bank will establish a program on its balance sheet and purchase various assets, such as government securities, commercial paper ( cp ), as well as exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). the sum of those assets to be purchased was set to be about 5 trillion yen. the total size of the program, including the fixed - rate operation, was set to be about 35 trillion yen. if the bank ’ s risk - taking asset purchases could activate the investment stance of market participants and attract funds into the markets, it could work in the direction of reducing risk premiums. the bank intends to begin the purchases as soon as possible. as mentioned in the beginning, the reason why the monetary policy meeting was moved forward to today and tomorrow is to promptly discuss and decide on principal guidelines for the purchase of etfs and j - reits, which obtained the authorization by the government pursuant to the bank of japan act, and to lay out a framework that can begin the purchases as soon as possible. the measures included in comprehensive monetary easing are extraordinary ones as monetary policy instruments of a central bank, and the bank is fully aware of that.

been moderate, the pace of improvement in the supply and demand balance is likely to remain moderate, and the timing of the year - on - year rate of change in the cpi entering the positive territory is likely to be sometime in fiscal 2011. as the rate of growth for the fiscal year, following 0. 1 percent in fiscal 2011, the pace of growth is expected to increase to 0. 6 percent in fiscal 2012. while taking some more time, japan ’ s economy is expected to steadily move toward the sustainable growth path with price stability. the outlook for economic activity and prices is associated with various risk factors. in particular, in the area of economic activity, there are some upside risks including faster growth in emerging and commodity - exporting economies. however, amid continued heightened uncertainty about the future, especially for the u. s. economy, attention should also be paid to downside risks to japan ’ s economy. regarding the outlook for prices, there is a possibility that inflation will rise more than expected mainly due to an increase in commodity prices brought about by high growth rates in emerging and commodity - exporting economies, while there is also a risk that the rate of inflation will fall due, for example, to a decline in medium - to long - term inflation expectations. the bank will carefully check, including those factors, whether japan ’ s economy is steadily making strides to the sustainable growth path with price stability. iii. conduct of monetary policy let me turn to the bank ’ s conduct of monetary policy, taking into account the developments in economic activity and prices at home and abroad. the bank recognizes that japan ’ s economy is faced with an extremely important challenge of emerging from deflation and returning to the sustainable growth path with price stability. based on that recognition, the bank has been making utmost contributions as a central bank through vigorous policy responses based on the three - pronged approach of pursuing powerful monetary easing, ensuring stability in financial markets, and providing support in strengthening the foundations for economic growth. in terms of pursuing powerful monetary easing, the bank has lowered twice the policy rate, which was at the lowest level in the world at 0. 5 percent even before the failure of lehman brothers. in addition, by increasing longer - term funds provision to financial institutions, the bank has been influencing directly the interest rates of longer terms of 3 - month and 6 - month. as a result, japan ’ s interest rates have been stable at extremely low levels, compared with those in the united states and europe, and