, the past decline in crude oil prices, and the " go to travel " campaign. that said, since one of the reasons for the decrease in demand is vigilance against covid - 19, price cuts that aim at stimulating demand - - which were seen during the period of deflation - have not been observed widely to date. as for the outlook, downward pressure on prices is projected to wane gradually along with economic improvement, and the effects of such factors as the decline in crude oil prices are likely to dissipate. the year - on - year rate of change in the cpi is expected to turn positive and then increase gradually ( chart 4 ). in the latest outlook report, it is projected that the rate of change will be in the ranges of minus 0. 7 to minus 0. 5 percent for fiscal 2020, 0. 2 to 0. 6 percent for fiscal 2021, and 0. 4 to 0. 7 percent for fiscal 2022. that said, there are high uncertainties over the outlook for economic activity and prices, and risks are skewed to the downside. the spread of covid - 19 has not subsided globally, including europe and the united states, and public health measures have been tightened in european countries. under these circumstances, the consequences of covid - 19 and the magnitude of their impact on domestic and overseas economies are highly unclear. in addition, attention needs to be paid to whether firms'and households'growth expectations will decline, leading to cautious spending attitudes. moreover, although financial system stability has been maintained and the bank considers that the economy will continue to be smoothly supported from the financial side, it is necessary to pay attention to the possibility that the financial system will be affected if the economy deteriorates more than expected. taking these factors into consideration, the bank will continue to closely examine developments in economic activity and prices as well as financial conditions. ii. the bank's conduct of monetary policy now, i would like to talk about the bank's conduct of monetary policy. the bank has enhanced monetary easing since march in response to covid - 19 ( chart 6 ). specifically, it has conducted the following three measures : ( 1 ) the special program to support financing in response to the novel coronavirus ( covid - 19 ) ; ( 2 ) an ample provision of yen and foreign currency funds without setting upper limits, mainly by purchasing japanese government bonds ( jgbs ) and conducting the u. s. dollar funds -

doing so was impossible highlights the second serious limitation of our pre - crisis policy toolkit : its inability to generate substantially more accommodation than could be provided by a near - zero federal funds rate. prior to the financial crisis, the size of the fed ’ s balance sheet was about $ 900 billion. assets consisted almost entirely of treasury securities. liabilities included currency held by the public and a relatively small volume of reserve balances. for more on the fed ’ s balance sheet, see www. federalreserve. gov / monetarypolicy / bst _ fedsbalancesheet. htm. for information on the federal reserve ’ s credit and liquidity programs that were implemented in response to the financial crisis, see www. federalreserve. gov / monetarypolicy / bst _ crisisresponse. htm on the board ’ s website. reserves were initially taken out of the banking system by not reinvesting principal payments from maturing securities and later by selling portions of securities holdings. in september 2008, the department of the treasury announced the temporary supplementary financing program, in which the proceeds of a series of treasury bill auctions, separate from treasury ’ s routine borrowing, were maintained in an account at the federal reserve bank of new york. the funds in this account served to drain reserves from the banking system. consider the following policy rule : r ( t ) = r * + p ( t ) + 0. 5 [ p ( t ) - p * ] - 2. 0 [ u ( t ) - u * ], where r is the federal funds rate, r * is the longer - run normal value of the federal funds rate adjusted for inflation, p is the four - quarter moving average of core pce inflation, p * is the fomc ’ s target for inflation ( 2 percent ), u is the unemployment rate, and u * is the longer - run normal rate of unemployment. based on the medians of fomc participants ’ latest longer - run projections, r * is approximately 1 percent and u * is about 4. 8 percent. accordingly, with the unemployment rate climbing to 10 percent and core pce inflation falling to 1 percent in 2009, this rule would have prescribed lowering the federal funds rate to minus 9 percent at the depths of the recession. in contrast, the standard taylor rule, which is half as responsive to movements in resource utilization, would have prescribed lowering the federal funds rate to minus 3 -