signs that the slowdown is bottoming out, such as the increasing trend in exports and bank lending. the chinese government has accelerated approvals for infrastructure investment and introduced subsidies for energy - saving electrical appliances and other goods. with the pace of consumer price inflation decelerating, the authorities have also started stimulating the economy on the monetary front, lowering the benchmark lending rates for two consecutive months. looking ahead, the growth rate of the chinese economy is unlikely to reach dramatic levels, but it is likely to rise gradually as these policy measures start producing effects. in the nies and the asean economies, exports have been affected by the slowdown in europe and china, but domestic demand has been firm on the whole, and production has been recovering moderately. as for the outlook, including other emerging economies such as brazil, the growth rate of emerging and commodity - exporting economies will likely increase gradually reflecting accommodative financial conditions and a recovery in real purchasing power following a decline in inflation rates. b. japan ’ s economy 1. economic activity i will now explain the current state of, and outlook for, japan ’ s economy based on the overseas economic developments i have just outlined. until the beginning of autumn 2011, japan ’ s economy picked up steadily following the plunge caused by the great east japan earthquake, which struck just as the economy was recovering from the lehman shock. thereafter, however, it remained more or less flat on the whole until around the early spring of 2012 mainly due to the adverse effects of the slowdown in overseas economies and the appreciation of the yen. more recently, with domestic demand remaining firm – led by reconstruction - related demand and private consumption – and exports continuing to show signs of picking - up, economic activity on the whole has started picking up moderately. the firmness in domestic demand is attributable to the following factors. demand for restoration and reconstruction of social infrastructure and of disaster - stricken facilities and homes has led to increases in public investment, business fixed investment, and housing investment. reconstruction - related demand has also been underpinned by changes in the behavior of firms and households triggered by the disaster. examples are efforts to strengthen the earthquake resistance of buildings and facilities and to bolster business continuity systems, investment in the area of new energy sources, and the purchase of energy - saving products. meanwhile, private consumption has been boosted by pent - up demand, that is, a recovery in demand following the temporary restraint due to the effects of bis central bankers

remain in place until the bank judges that price stability is in sight. in this context, financial conditions in japan have continued to ease. the overnight call rate has been below the 0. 1 percent level. with regard to long - term interest rates, yields on japanese government bonds ( jgbs ) with a remaining maturity of three years or less are 0. 1 percent, and those on 10 - year government bonds are at the lowest level in about nine years. firms ’ funding costs have also declined moderately, as shown, for example, by the bis central bankers ’ speeches fact that the average contracted interest rate on new loans and discounts is in the region of only 1 percent. 1. clarification of the policy time horizon based on “ the price stability goal in the medium to long term ” at the monetary policy meeting held in february this year, the bank introduced “ the price stability goal in the medium to long term ” as a part of its efforts to further clarify its determination to overcome deflation. “ the price stability goal in the medium to long term ” is the inflation rate judged by the bank to be consistent with price stability sustainable over the medium to long term. at present, the bank judges “ the price stability goal in the medium to long term ” to be within a positive range of 2 percent or lower in terms of the year - on - year rate of change in the cpi and, more specifically, sets a goal of 1 percent for the time being. on this basis, the bank has stated that for the time being it will aim to achieve the goal of 1 percent inflation in terms of the year - on - year rate of increase in the cpi through the pursuit of powerful monetary easing, which i mentioned earlier. as you can see, by presenting its commitment regarding the policy time horizon, the bank has further clarified its determination to pursue monetary easing. 2. expansion of the asset purchase program the program currently implemented by the bank was established to further enhance monetary easing by encouraging a decline in longer - term interest rates and various risk premiums in a situation where there was little room for a further decline in short - term interest rates. established on the bank ’ s balance sheet, the program is used to purchase various financial assets – such as government securities, cp, corporate bonds, exchange - traded funds ( etfs ), and japan real estate investment trusts ( j - reits ) – and to conduct fixed - rate funds - supplying operation. since the establishment of the program