to require attention, given that there are some uncertain factors including geopolitical developments and their economic implications. on the domestic side, stock prices are weak. hence, careful monitoring is required of progress in the resolution of the nonperforming - loan problem and its effects on stock prices, corporate finance, and the economy. on the price front, import prices are on a rising trend with some fluctuations, reflecting developments in prices of overseas commodities such as crude oil. domestic corporate goods prices have been declining gradually on the whole with the continued fall in machinery prices, despite the rise in import prices and the improved supply - demand balance in materials industries. consumer prices and corporate services prices have also been declining gradually. looking at the conditions influencing price developments, import prices are projected to be firm for the time being due mainly to developments in crude oil prices. on the other hand, factors such as the ongoing technological innovations in machinery and the streamlining of distribution channels will continue to push prices downward. meanwhile, the overall state of supply and demand is expected to this report is based on data and information available at the time of the bank of japan monetary policy meeting held on march 4 and 5, 2003. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on march 4 and 5, 2003 as the basis for monetary policy decisions. continue exerting downward pressure on prices, with domestic demand continuing to be weak for a while. however, the low levels of inventories and the improvement in the supply - demand balance in materials industries will support prices in corporate transactions. against this background, the decline in domestic corporate goods prices is likely to be mitigated in the near term. the pace of year - on - year decline in consumer prices is expected to become somewhat slower, as medical costs are projected to rise from april due to public insurance reforms. as for the financial environment, the outstanding balance of current accounts at the bank of japan is recently moving at around 20 trillion yen, as the bank provides ample liquidity. under these circumstances, in the money markets the overnight call rate continues to hover at very close to zero percent. moreover, longer - term interest rates continue to be at low levels on the whole, and the markets remain steady to date as the fiscal year - end approaches. yields on long - term government bonds declined again to the range of 0. 7 - 0. 8 percent after moving in the range of 0. 8 -

2014. these data speak volumes about investors ’ perception of our economy ’ s prospects. what makes us particularly happy is that the government borrows in dinars, over a ten - year period, at rates that are much lower today. this is another concrete example of savings made based on everything done in the past period, with full coordination of monetary and fiscal policy measures. last but not least, we have lowered the share of non - performing loans, which was particularly high, below the pre - crisis levels. their stock has been more than halved in the previous two years. a good year is behind us, and we expect positive trends to continue into this year as well. this is also confirmed by our new projections, under which inflation will move within the bounds of the new, lower target band in the next two years as well. in regard to the economic growth projection, we believe that economic policy measures are well - calibrated, and have created the basis for sustainable acceleration of gdp growth of around 3. 5 % in 2018 and 2019. chart 1 inflation projection ( y - o - y rates, in % ) chart 2 gdp growth projection ( y - o - y rates, in % ) - 1 12 3 12 3 12 3 12 3 - 2 source : nbs. iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv source : nbs. international environment – outlook and risks last year saw volatile trends in the international market, which will continue, by all odds, into this year as well. given the openness of our economy, we carefully monitored and analysed movements in the international environment. the period from the previous report was marked by a brighter global growth outlook. particularly important for us is the improvement of the growth outlook of the euro area and countries in the region, which are our important foreign trade partners. on this basis as well, we expect positive effects on further growth in our exports, which was robust last year as well, recording a two - digit rate and maintaining a broad dispersion by product and geographical area. while global growth prospects are favourable, trends in some markets are still marked with uncertainty. in commodity markets, oil prices increased further compared to the previous inflation report, reflecting chart 3 revisions of real gdp growth forecasts for chart 4 movements in gdp and economic activity indicators 2018 and 2019 by the imf of the euro area ( quarterly rates ) ( in % ) 2018 ( previous projection ) 2019 ( previous projection