cpi is about 0 percent due to the decline in energy prices, and the baseline scenario outlined in the april 2015 outlook for economic activity and prices shows that the timing of reaching the price stability target has been delayed to around the first half of fiscal 2016 ( chart 16 ). however, the bank ’ s policy board has judged that no policy actions are necessary at this point based on the view – as i mentioned earlier – that the underlying trend in inflation is firmly maintained under the virtuous cycle of the economy. with regard to the timing of reaching the price stability target, i believe that the phrase “ at the earliest possible time ” represents the essence and that “ a time horizon of about two years ” is only a non - binding target, as the commitment to achieving a specific price level within a specific time frame, in my opinion, does not fit the conduct of monetary policy adopted by other major countries in the first place. that is, in my understanding, the price stability target is a rolling target with a time horizon of about two years, and this is broadly in line with the idea of inflation targeting adopted by major countries. from this viewpoint, the delay in the timing of reaching the price stability target would not be the essential problem. as i touched on earlier, firms and households generally have a negative reaction to mere inflation, mainly due to concern over a rise in costs and to the negative effects on real wages, both stemming from a rise in import prices. on the other hand, in continuing with qqe, i consider it necessary to take into account that this policy is a kind of shock therapy that influences formation of people ’ s inflation expectations through the lowering of real interest rates and risk premiums brought about by massive asset purchases, as well as through a strong commitment. the bank has provided forward guidance – namely, that it will continue with qqe, as long as it is necessary for achieving the price stability target in a stable manner – and of course, the necessity of continuing qqe will be judged in line with this guidance. i therefore do not think that the current policy framework should be reviewed in an automatic fashion simply because two years have passed since the introduction. in my understanding, the price stability target is a flexible concept with a certain range for upward and downward deviations of the actual inflation rate from the target under the framework of forecast targeting. it is also my understanding that achieving the price stability target in a stable manner does not refer to a state in which the

s massive jgb purchases – might in part be weakening the effects of monetary policy. there is also a possibility that the fluctuations in long - term interest rates reflect the move to factor in improvement in the outlook for economic activity and prices. the third key point is also related to european factors – namely, developments in political and economic conditions in greece. as the greek government faces severe financing needs, negotiations regarding financial assistance to the country continue. at this point, possible effects on peripheral european countries are limited. however, i would like to monitor future developments whether or not any unexpected knock - on effects emerge in global financial markets. c. developments in japan ’ s economy looking at developments in japan ’ s economy for the january – march quarter of 2015, not only business fixed investment but also exports and production maintained their moderate improving trend. private consumption and imports were resilient and final demand remained firm. for the april – june quarter, the economy is expected to continue recovering moderately because, for example, it seems that private consumption has been resilient since march, although production is projected to be more or less unchanged, mainly due to inventory adjustments in some industries ( chart 7 ). expectations for somewhat higher growth in the world economy will also serve as a tailwind for japan ’ s economy. the virtuous cycle from income to consumption and investment will likely operate, with its certainty gradually increasing, on the back of the firm employment situation and favorable corporate results. however, we should probably be mindful of the risk that the increase in households ’ real purchasing power and the improvement in corporate profits, both brought about by lower crude oil prices, will not lead to an expansion of spending by as much as expected, and consequently pressure for excess savings – or for an increase in current account surplus – will not be alleviated easily. bis central bankers ’ speeches with regard to the employment and income situation, which forms the basis for the virtuous cycle that i just mentioned, wages continue to rise moderately in a situation where labor market conditions have become increasingly tight, even after the year - on - year growth in total cash earnings was revised downward due to the replacement of samples in the monthly labour survey ( chart 8 ). wages are expected to continue increasing moderately, reflecting a base pay increase that is likely to take place for a second consecutive year. thus, private consumption is expected to reach a moderately higher level as the effects of a decline in real income due to the consumption tax hike in april 2014 dissi