on - year rate of change in the cpi for all items excluding energy, for which prices fluctuate significantly, as well as fresh food has been in the range of 0. 5 - 1. 0 percent. regarding the outlook, it is expected to moderately increase in positive territory on the back of improvement in the output gap and rises in medium - to longterm inflation expectations and wage inflation. concerning risks to the outlook, the course of covid - 19, including variants, and its impact on domestic and overseas economies continue to warrant attention. in addition, there are extremely high uncertainties over the situation surrounding ukraine and the associated developments in commodity prices, global financial and capital markets, and overseas economies. meanwhile, japan's financial system has maintained stability on the whole. regarding financial risks from a longer - term perspective, while there is a possibility that prolonged downward pressure on financial institutions'profits may lead to a gradual pullback in financial intermediation, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. japan's economy is on its way to recovery from a downturn caused by covid - 19, as seen in its gdp remaining below the pre - pandemic level. in addition, the economy has recently been under downward pressure from an outflow of income due to rising commodity prices. on the price front, although the year - on - year rate of change in the cpi has risen to around 2 percent, this is mainly due to an increase in energy prices. given such developments in economic activity and prices, the bank will persistently continue with the current powerful monetary easing centered on yield curve control, aiming to firmly support japan's economy and thereby achieve the price stability target of 2 percent in a sustainable and stable manner. thank you.

and dynamic knowledgebased economy in the world ”. in 2005, after the mid - term review, european policymakers renewed their commitment to the ambitious goals. even though a number of member states have achieved significant progress in several areas ( such as the liberalization of the electricity market and the progress in pension and labor market reforms ), much remains to be done. more effective and efficient investment in knowledge and innovation is necessary, and labor and product markets need to be made more flexible. indeed, research by the ecb 4 suggests that euro area countries typically have undertaken more comprehensive and far - reaching reforms than other oecd countries over the past decade. however, a comparison of reform progress across policy areas shows that euro area countries have generally not made more progress than other oecd countries in reforming the “ difficult ” areas, where political resistance is strong. these “ difficult ” areas have included – for instance – the modification of employment protection legislation ( epl ), i. e. relaxing the rules governing temporary contracts, as well as extending the working age while reducing incentives for early retirement or scaling back the automatic indexation of wages. 5 the reform process therefore appears to have slowed down in many euro area countries. for emu to continue to be a success, structural reforms remain essential to raise factor productivity and potential output, create new jobs and achieve lower prices and higher real incomes! it goes without saying that further improvements in the euro area international competitiveness would evidently ensure that the euro area will – sustainably – play a role in the international monetary system equal to its economic weight. moreover, such improvements are vital to master the challenges facing emu in the years to come. to date, the 8 new member states from central and eastern europe which joined the european union in 2004, and the two which became members in 2007, have succeeded in duval, elmeskov, 2006, “ the effects of emu on structural reforms in labour and product markets ”, ecb wp no 596. see e. g., rajan, g. r, 2005, “ revitalising reforms in europe ”, the ludwig erhard lecture, brussels, 8 december. transforming their economies from centrally planned systems to market economies. substantial progress has been achieved in the areas of property rights and privatization as well as capital and trade liberalization. as the 12 new eu member states – including cyprus and malta – have anchored their institutional structures to the eu, they are being viewed as increasingly secure places