to the bank ’ s measures decided on october 31, medium - to long - term inflation expectations are expected to gradually converge to around 2 percent – the price stability target. on the back of developments in the output gap and inflation expectations, the year - on - year rate of increase in the cpi ( excluding fresh food and the direct effects of the consumption tax hikes ) is likely to be at around the current level for the time being, subsequently accelerate gradually, and reach around 2 percent – the price stability target – in or around fiscal 2015. this outlook for prices has not changed from the one in the april 2014 outlook report. in terms of the median of the board members ’ forecasts of the year - on - year rate of increase in the cpi excluding fresh food, this was 1. 2 percent in fiscal 2014, 1. 7 percent in fiscal 2015, and 2. 1 percent in fiscal 2016 ( chart 10 ). concluding remarks the most important point i want you to understand with regard to the expansion of the qqe is that the bank strongly commits itself to achieving the price stability target of 2 percent at the earliest possible time and maintaining it in a stable manner. against this background, i expect firms to make decisions and engage in economic activity based on the assumption of 2 percent inflation. conversion of the deflationary mindset and the rise in inflation expectations, which the bank is trying to achieve through the qqe, do not only mean a rise in figures of the markets ’ break - even inflation rates or of economists ’ survey results. rather, such changes should also occur in the minds of business leaders like you and be reflected in actual decision - making and behavior. after the protracted deflation, such changes have gradually started to take place and, in my view, this is what you recognize the most. what you likely have in mind as firms ’ price - setting strategy and employment and wage management must be quite different from two years ago. the rise in base pay this spring, which was made for the first time in many years, is a prime example of this. in this sense, i have great interest in developments in wages and price settings through spring of next year. moreover, in the process of converting the deflationary mindset, hoarding cash and deposits will become costly. as a corporate strategy, using their profits in a more productive manner is imperative. among others, investment in facilities and human resources, as well as reestablishment of supply chains

including subcontractors are possible options. at the same time, this would be a part of the process of having the fruits of the correction of the yen appreciation and of overcoming deflation spread through the whole economy. such progress should not be stopped now. to achieve the price stability target, the bank has been taking “ action ” and will continue to do so. i would like to conclude my speech by expressing my expectations for your “ action ” that looks toward the situation for the economy after overcoming deflation. thank you for your attention. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches