would be upward pressure on interest rates in accordance with such improvement. the degree of monetary easing will increase if the bank contains such upward pressure and thereby maintains the shape of the yield curve. b. toward achieving the price stability target the bank projects that the timing of the year - on - year rate of change in the cpi reaching about 2 percent will be around fiscal 2019. in the outlook report, the bank has delayed such timing several times, and i acknowledge that there is some criticism on this point. the bank certainly aims to achieve the price stability target of 2 percent at the earliest possible time, and the delay in such timing is not desirable. however, what i believe is important for the bank is - - in the event that the 2 percent price stability target cannot be achieved due to economic and price developments at the time - - to thoroughly explain the reasons behind the target not being achieved and to implement monetary policy so that the economy will follow a path toward the 3 / 6 bis central bankers'speeches target. after all, it is well known that the policy framework of inflation targeting is expected to perform the role of a communication tool. as i mentioned earlier, the year - on - year rate of change in the cpi is in the range of 0. 0 - 0. 5 percent, meaning that there is still a long way to go to achieve the price stability target of 2 percent. nevertheless, my view is that the momentum toward achieving the target has started to steadily increase. in this regard, let me highlight two points. first, although it has been said that wages have not been increasing as expected, scheduled cash earnings have continued to rise for more than two years. let me also note that, as scheduled cash earnings have been rising steadily at small firms, where the majority of workers are employed, a clearly increasing number of households can now feel that their wages actually have been rising. this is highly important in terms of raising people's inflation expectations. the second point is that there clearly has been a growing impetus toward raising productivity, due in part to labor shortages. as i noted earlier, investment that serves a positive purpose - such as that in efficiency - improving and labor - saving machinery and equipment, and in research and development for growth areas - - is expected to further rise, and this will likely contribute to improving productivity. moreover, it has become easier for firms to take advantage of such new information technologies as artificial intelligence ( ai ) and the internet of things ( iot ). let

a rapid increase in medium - to long - term inflation expectations from late 2012. in recent months, however, while some indicators showed an uptrend, several others have showed a slow pace of increase or been more or less flat ( chart 3 ). 4 also, these inflation expectations are “ short - term ” inflation expectations are more prone to current actual price developments and thus tend to be more volatile than “ medium - to long - term ” inflation expectations ( chart 4 ). in addition, the scheduled consumption tax hikes ( an increase from 5 to 8 percent in april 2014 and an increase from 8 to 10 percent in october 2015 ) are likely to further raise “ households ’ short - term ” inflation expectations, if the effects of these consumption tax hikes are factored in sufficiently. “ households ’ medium - to long - term ” inflation expectations will increase further if the term for these expectations covers the period in which the two tax hikes occur, but if the term covers a longer period of time the effects of the tax hikes will be diluted. as april 2014 approaches, short - term inflation expectations may rise further, and in fiscal 2014 they may exceed 2 percent in view of the effects of the tax hike, monetary accommodation, and the lagged impact of the yen ’ s depreciation. attention should therefore be paid to whether short - term inflation expectations will turn out as expected. bis central bankers ’ speeches still well below the 2 percent target and thus there is uncertainty as to whether these expectations will rise to the level of 2 percent during the projection period. for example, breakeven inflation ( bei ) rates increased rapidly in line with the yen ’ s depreciation from late 2012, although such a strong correlation had not been present earlier ( chart 5 ). however, the bei rates appear to have become more or less constant since mid - 2013, and this trend appears to be in line with the relatively stabilized exchange rate of the yen against the u. s. dollar. changes in price responsiveness to the output gap another important factor that could contribute to the achievement of the 2 percent target – in addition to the increase in inflation expectations – is an increase in the “ responsiveness of prices to the output gap ” ( or the slope of the phillips curve ). in general, the slope of the phillips curve steepens when firms find it easier to raise their sales prices or pass their input costs on to their sales prices given the level of the output gap. also,