has spread to business fixed investment. the plans for such investment for fiscal 2023 in the september tankan ( short - term economic survey of enterprises in japan ) indicate that investment is likely to increase clearly, by around 10 percent from fiscal 2022 ( chart 3 ). looking ahead, the corporate sector is expected to continue to see improvement, as a virtuous cycle operates in which improvement in corporate profits leads to a rise in business fixed investment. turning to the household sector, private consumption has been on an increasing trend, reflecting the materialization of pent - up demand, i. e., demand that had been suppressed during the pandemic. it should be noted that, although wage hikes have been achieved through the annual spring labor - management wage negotiations, the pace of increase in private consumption has been moderate so far, with price rises continuing ( chart 4 ). as for the outlook, pent - up demand is projected to gradually slow, but it is expected that wages will continue increasing firmly in reflection of high prices, and that an underpinning of private consumption from wage increases will become evident. risks surrounding economic activity however, there are extremely high uncertainties surrounding this baseline scenario. one major risk concerns overseas economies. although the international monetary fund ( imf ) projects in its latest world economic outlook ( weo ) that the global economy will continue growing at a moderate rate of around 3 percent, each economy faces downside risks. in advanced economies, inflation rates have been declining but are still somewhat high relative to central bank targets. in the united states in particular, as the economy has continued to see firm developments, long - term interest rates have risen significantly since summer, with market participants expecting prolonged monetary tightening. in addition, it is possible that the impact of rapid policy interest rate hikes in advanced economies to date will turn out to be significant, with a time lag, on both the real economies and financial systems. given this, due attention needs to be paid to the impact of this risk on global financial and foreign exchange markets. attention is also warranted on whether or not the chinese economy will lose its recovery momentum as it faces structural issues such as adjustments in the real estate market. moreover, it is necessary to keep an eye on the risk of upward pressure being exerted on prices of commodities, including grains, due to factors such as geopolitical risks surrounding ukraine and the middle east. on the domestic front, with progress in the pass - through of

- point was + 15 %. the likely accuracy of these expected responses is extremely unclear. but “ no deal ” expectations are already affecting financial markets. as the perceived probability of a “ no deal ” brexit has risen, sterling has weakened and uk short - term interest rates have shifted downward ( chart 31 ). having expected rates to rise modestly at the time of the may inflation report, financial markets now expect uk interest rates to fall over the next year or so, before rising gradually. all speeches are available online at www. bankofengland. co. uk / speeches chart 31 : uk short rates per cent 1. 75 1. 5 1. 25 0. 75 0. 5 0. 25 latest ( cob 18 july ) may 2019 ir sources : bloomberg lp and bank calculations. notes : may 2019 ir line refers to 15 - day average curve used to condition the may inflation report projections. this forward path of interest rates is, in practice, a rather peculiar one. it is likely to reflect a probabilityweighted mix of two quite different possible outcomes for the economy – a “ deal ” scenario in which the economy grows and a “ no deal ” scenario in which some expect it could shrink. in that sense, the market path of interest rates is not an accurate reflection of the most likely path of interest rates. to illustrate, consider a simple thought - experiment. assume, in the event of a “ no - deal ”, the economy followed the course expected by companies in chart 30. assume also, in that event, that monetary policy followed a simple taylor rule and that inflation was unaffected. 29 these are clearly very stylised assumptions. nonetheless, on those assumptions, a taylor rule would suggest interest rates would need to be cut sharply to their zero bound, to cushion the hit to growth. if we do the same thought - experiment under the “ deal ” scenario, again using a simple taylor rule, we get instead an upwards - sloped trajectory for expected interest rates, on average 25 - 50 basis points higher than the slightly upward - sloped market path for interest rates prevailing in may. clearly, these are two very different interest rate trajectories, reflecting two quite different brexit economic outcomes. 30 in the event of a ‘ deal ’, upward pressure on demand would also likely be accompanied with a stronger exchange rate, so the ex - ante impact on inflation is ambiguous. my mpc colleague, jan vlieghe, made a