particularly for the u. s. economy, is also accompanied by various uncertain factors. amid the persisting fragility and uncertainty of the economy, it should continue to be borne in mind that unstable movements in the foreign exchange and financial markets at home and abroad would easily exert a negative influence on the economy. on the price front, import prices become almost unchanged because the continued upward pressure from the rise in crude oil prices around early spring is offset by the recent appreciation of the yen. domestic wholesale prices are also almost flat since the decline in machinery prices and the reduction in electricity charges are offset by the effects of the increase in import prices in the past and of the progress in inventory adjustment. however, consumer prices and corporate service prices continue to decline. as for the conditions surrounding price developments, the balance between supply and demand is expected to still keep exerting downward pressure on prices amid persistently weak domestic demand for a while, although the progress in inventory adjustment will support prices to some degree. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the this report is based on data and information available at the time of the bank of japan monetary policy meeting held on june 11 and 12, 2002. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on june 11 and 12 as the basis for monetary policy decisions. streamlining of distribution channels will continue to restrain prices. under these circumstances, as import prices are likely to turn down, domestic wholesale prices, which are sensitive to import prices, will edge down after remaining flat a little further. on the other hand, consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. this is partly because while the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent, the faster pace of decline in wages may possibly reinforce the ongoing decline in prices, especially for services prices. as for the financial market, in the short - term money markets, the outstanding balance of the current accounts at the bank of japan is recently moving around 15 trillion yen as the bank continues to provide ample liquidity to the money market. in these circumstances, the overnight call rate continues to move around zero percent. moreover, interest rates on term instruments remain steady. yields on long - term government bonds are mainly moving in the range of 1. 3 - 1. 4 percent recently. yield spreads between private

. 8 percent, which shows that prices other than those of energy have also been rising. in terms of price hikes for items other than energy and related goods, i am focusing on the price changes in digital appliances ( chart 5 ). 1 digital appliances refer to the following cpi items : tv sets, mobile audio players, electronic dictionaries, video recorders, personal computers ( desktop type ), personal computers ( note type ), pc printers, digital cameras, and video cameras. bis central bankers ’ speeches the cpi for digital appliances has risen by around 30 percentage points, from the range of minus 22 – 23 percent for february 2012 to the range of 6 – 7 percent for february 2014 on a year - on - year basis. this had an indispensable effect on the rise in the core - core cpi. as the background to this, it can be pointed out that prices of digital appliances had fallen to the bottom and fierce price competition in the household electrical appliances industry came to an end. it should not be overlooked that the halt in the price decline of digital appliances is attributable to the fact that prices of these products had become more susceptible to the effects of the yen ’ s depreciation with the increased import penetration ratio. a decline in competitiveness and pricing power in the industry in japan can be pointed out as a reason behind such susceptibility. however, the cpi for digital appliances became more or less flat on a year - on - year basis in the march - april period of 2014 excluding the effects of the consumption tax hike as the yen ’ s depreciation paused, and the core - core cpi for the kuarea of tokyo in may declined by 0. 2 percentage point from the previous month on the same basis. the effects of the halt to the yen ’ s depreciation trend on future developments in prices should be monitored carefully. c. overseas economic and financial developments as i just mentioned, japan ’ s economy is expected to continue growing at a pace above its potential as a trend due to the ongoing firm domestic demand, while it will be affected by the front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike. the probability of this scenario will be enhanced by the moderate increase in exports led by the recovery of overseas economies, particularly advanced economies. in this regard, recent developments in overseas economies will support japan ’ s economy through exports ; for example, the u. s. economy has been recovering moderately