the changes. the third reason for my vote relates to the 2024 annual spring labor - management wage negotiations. the first provisional aggregate results compiled by the japanese trade union confederation ( rengo ) showed that the year - on - year rate of increase in wages ( including seniority - and performance - related wages ) agreed in the negotiations was significant at 5. 28 percent, which was even higher than the previous year's wage hikes. my thinking was that, if the first provisional aggregate results indicated a year - on - year increase of at least 5 percent, that would be a good benchmark for going ahead with policy changes. this was because past results suggested that, if the annual spring labor - management wage negotiations achieved a 5 percent wage hike, the rate of increase in " sticky " consumer prices, especially services prices, would likely return to a level in which the achievement of the bank's price stability target comes into sight. my view back in january was that the results would not exceed this benchmark. the reason for my belief was that, although rengo had set a target for wage hikes of 5 percent or more at this year's negotiations, experience suggested that the numbers usually turn out to be lower than the level demanded by labor unions. thus, i assumed we would have to make a comprehensive judgment on the timing of policy changes after examining other data, including economic indicators to be released in april and onward. however, the yearon - year increase turned out to be 5. 28 percent, which took me by surprise. there may be some issues with the aggregate results of the annual spring labor - management wage negotiations, such as the range of firms included in the calculations. judging by the past, however, these results allow an estimation of wage developments at firms overall. moreover, the high figures in the first provisional aggregate results suggest that many firms have enough encouraging prospects for business performance and plans for improving productivity to cover wage costs. this gave me reason to expect that the results of economic indicators and other data to be released in april and onward would be relatively positive ; thus, i did not see the need to wait for those results to come out before making policy changes. future conduct of monetary policy next, i will talk about the future conduct of monetary policy. the goal of the bank's monetary policy will continue to be the achievement of sustainable and stable inflation, and until this goal is reached, it is important to maintain the current accommodative financial conditions

exchange rate are one factor that directly affects yen - denominated import prices, which tend to correlate with goods prices with a time lag. changes in import prices will spread from upstream to downstream demand stages in producer prices, and presumably this will eventually spill over into consumer prices ( chart 1 ). that said, it warrants attention that the extent of the spillover and time lag is not fixed, because this depends on how firms at each demand stage pass on cost increases. meanwhile, if the rate of increase in this fiscal year's consumer price index ( cpi ) is pushed upward through the channel i have mentioned, this could affect the results of the 2025 annual spring labor - management wage negotiations. the impact of foreign exchange rate developments on firms'inflation expectations is also an important factor. firms'price - setting stance is significantly affected by their medium - to longterm outlook for inflation for three to five years ahead. in terms of firms'inflation outlook, the bank's march 2024 tankan ( short - term economic survey of enterprises in japan ) shows that firms'medium - to long - term inflation expectations have been stable at about 2 percent since around 2022 ( chart 2 ). this is evidence that it has become more likely that sustainable and stable inflation will be achieved. should there be large swings in these inflation expectations due to foreign exchange rate developments, the bank may need to consider making monetary policy responses. ii. economic activity and prices a. economic activity 1. current situation i would now like to talk about economic activity, which can be considered as a " fundamentals " factor when looking at future developments in foreign exchange rates. japan's economy has recovered moderately, although some weakness has been seen in part ( chart 3 ). the effects of a suspension of production and shipment at some automakers have recently been exerting downward pressure on the economy, but i believe this is only temporary. in my view, if this temporary factor is excluded, the economy is recovering moderately at the moment. in what follows, i would like to take a look at economic activity in detail, disregarding this temporary factor that has been pushing down the economy. let us first look at private consumption. faced with the recent high inflation, households are becoming thriftier. for example, they have been shifting toward lower - priced goods - - such as private label products - - especially when purchasing nondurable goods, which mainly include food and daily necessities