gap is still unlikely for the time being even though the economy has stopped deteriorating. this report was written based on data and information available when the bank of japan monetary policy meeting was held on may 18, 1999. the bank ’ s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on may 18 as the basis of monetary policy decisions. furthermore, the decline in wages is likely to continue exerting downward pressure on prices. under such circumstances, prices are expected to remain weak. in the financial markets, the overnight call rate has stayed at nearly zero, and confidence about the availability of liquidity is growing among many financial institutions. interest rates on term instruments are declining further, reflecting the market ’ s view that monetary easing will continue for some time. moreover, the japan premium has almost disappeared. long - term interest rates, on the whole, have declined against the background of no clear signs of economic recovery and the decline in term interest rates. stock prices have been firm reacting to the further rise in u. s. stock prices since march. the amount outstanding of funds in the call money market has been gradually decreasing. to date, this has not led to any difficulty in funds settlement, but close attention should be paid to future market developments. with regard to corporate finance, credit demand for economic activities such as fixed investment remains weak. firms ’ moves to increase their on - hand liquidity in the face of difficult fund - raising conditions are settling down. as a result, credit demand in the private sector has weakened further. private banks have basically retained their cautious lending attitude. however, they are no longer constrained by severe fund - raising conditions and insufficient capital base. under these circumstances, major banks have started to extend loans more actively than before, especially for projects involving relatively small credit risks, and their lending stance is gradually becoming positive. as a result of these developments, credit conditions, which tightened previously, have eased somewhat. the situation continues to warrant careful monitoring on the extent to which private banks will ease their lending stance, and how this change will affect firms ’ propensity to invest.

hike and the ensuing fallback in demand turned out to be strong, particularly with respect to high - priced products, not only because the margin of the hike was large but also because a second tax hike was expected down the road. application of a reduced tax rate on some products and policies concerning the provision of free education will also contribute to lightening the burden on households. according to the april 2018 outlook for economic activity and prices ( hereafter the outlook report ) released by the bank, the median of the policy board members'forecasts of the real gdp growth rate in fiscal 2018 was 1. 6 percent. this represents a slight upward revision of the forecast made three months ago. in fiscal 2019 and 2020, the growth rate is expected to decline to around 0. 8 percent, a level close to the potential growth rate, because of such factors as a cyclical slowdown in business fixed investment and a fallback in olympic games - related demand. needless to say, the outlook is not free from uncertainty. among the main risks, we must keep a watchful eye on overseas factors. in particular, i am concerned about a possible spread of protectionist measures in trade policy. in the past, trade and investment liberalization, coupled with the advances in technological innovation, has driven global economic growth. as new technologies have been disseminated through trade and investment activities, productivity improvement and further technological development have been promoted across the regions. if the protectionist mood gains traction and constrains trade and investment, the global economy could be deprived of its main growth engine. moreover, uncertainty over the u. s. economic policy management is growing. if the inflation rate accelerates or concerns over the deterioration of the fiscal balance grow while favorable economic conditions continue and the government implements expansionary fiscal measures, there is a risk that interest rates will shoot up, triggering a stock price plunge and changes in the global flow of funds. in addition, we must keep a watchful eye on the negotiations on the united kingdom's exit from the european union ( eu ) and geopolitical risks related to north korea and the middle east. all these risk factors could significantly affect japan ; therefore, while continuing to pay due attention to them, the bank will closely examine developments at home and abroad. ii. prices a. current situation next, i will turn to price developments. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food for april,