2 ) a tightening of labor market conditions due to the effects of various economic stimulus measures taking hold. if the observed inflation rate — as a result of the past rise in energy prices and the depreciation of the yen — rises, people ’ s inflation expectations are likely to change gradually through the adaptive formation mechanism. the bank ’ s pursuit of monetary easing through its strong commitment to achieving the price stability target is also expected to contribute to a rise in people ’ s inflation expectations. under these circumstances, prices are likely to gradually turn to a clear uptrend. in terms of the median of policy board members ’ forecasts in the april 2017 outlook report, the rate of increase in the cpi for all items less fresh food is projected to steadily accelerate to 1. 4 percent for fiscal 2017 and 1. 7 percent for fiscal 2018. i feel comfortable with this outlook and believe that the momentum toward achieving the price stability target of 2 percent is intact. ii. monetary policy in september 2016, the bank introduced quantitative and qualitative monetary easing ( qqe ) with yield curve control as a new framework for strengthening monetary easing. the framework consists of the two components of an inflation - overshooting commitment and yield curve control. under the inflation - overshooting commitment, the bank commits itself to continuing to expand the monetary base until the observed year - on - year rate of increase in the cpi for all items less fresh food exceeds the price stability target of 2 percent and stays above the target in a stable manner. let me note that the effects of monetary policy spread through the economy with a certain time lag. therefore, central banks in general conduct monetary policy in a forward - looking manner based on projections for economic and price developments. in this respect, the inflationovershooting commitment is an extremely strong commitment in that it is linked to observed cpi inflation. as i mentioned earlier, in japan, the expectation — shaped by past experience — that prices will not rise much in the future is deeply entrenched. in this situation, i believe that a strong commitment like this is necessary in order to try to enhance public confidence that the price stability target will be achieved and thereby raise inflation expectations. under yield curve control, the bank facilitates the formation of short - and long - term interest rates that are considered most appropriate in light of the 2 percent price stability target. in the current guideline for market operations, the target level for the short - term policy interest rate is set to minus 0.

technological platforms to expand the reach of financial markets, in particular the reach of the rbi retail direct and fx retail. in the derivative markets, efforts are underway to introduce electronic trading platforms for a larger number of derivative products and to expand the central clearing of products. to foster greater efficiency, application programming interfaces ( apis ) for reporting trades to nds - om and accessing the rfq dealing mode are being contemplated. introduction of bond forwards is being considered to enable long - term investors to manage their interest rate risks efficiently – draft guidelines in this regard were issued in december 202341. the reserve bank remains engaged with stakeholders to assess the need for the introduction of new products and infrastructure based on evolving market developments. 28. fifth, bank treasuries need to scale up their dynamism to utilise the opportunities presented in the context of the recent regulatory reforms. this is very critical for achieving efficient market intermediation, effective management of financial risks and alignment of financial variables across different segments and markets. from this financial year ( 2024 - 25 ), the new prudential framework for investment by banks has come into effect. the new draft reserve bank of india ( bond forwards ) directions, 2023 – dated december 28, 2023 regulations provide increased flexibility to banks in managing their treasuries and offer scope for increased efficiency, provided banks manage their treasury function actively. the framework of assessment of a bank ’ s treasury should take into account risks arising out of action and risks arising out of inaction i. e., missed opportunities. 29. sixth, appropriate safeguards should be put in place to address the new challenges posed by new products, participants and markets. for example, as sophisticated otc derivative products are introduced, they must be accompanied by adoption of certain safeguards, both by the market - makers as well as customers. as our markets get integrated with global markets and non - resident participation increases, transmission channels from global developments will become stronger and speedier. this will require greater watchfulness and proactive management of the associated risks by market participants even as the opportunities are grabbed. conclusion 30. to conclude, the reserve bank ’ s efforts in recent years has been to develop the financial markets in a manner that can continue to meet the needs of a growing and globally connected economy while fostering trust, stability and innovation. trust in financial markets has been sought to be promoted through market reforms which have focused on ensuring fair market conduct by preventing market abuse ; fair