deflationary period, firms have become more likely to pass on cost increases to selling prices at each stage of demand. let us look back at firms'business strategies in the deflationary environment. many firms at the time, faced with intense price competition, were forced to maintain or lower their selling prices even at the expense of some measure of profit. in this context, they secured profits through business strategies that emphasized cutting costs, including the wages of workers. with these points in mind, the current situation - - where firms'pass - through of cost increases has been more widespread than expected - - seems to suggest that the deflationary environment in which price competition was predominant is beginning to undergo a sea change. next, i would like to touch on sticky consumer prices. these prices are thought to be more susceptible to medium - to long - term inflation expectations than short - term expectations, since their index is made up of items for which prices change relatively infrequently. sticky consumer prices are also considered to be affected by wage developments. as i suggested earlier, if we take it that firms have recently begun to emerge from a deflationary environment, the addition of upward pressure on workers'wages, which firms restrained in the deflationary environment, is likely to affect sticky consumer prices. there is a strong tendency in japan for firms to revise wages at the outset of the fiscal year, especially for regular employees, as typified by the annual spring labor - management wage negotiations. given the results of the spring 2023 negotiations, sticky consumer prices are also expected to rise ( chart 10 ). several points are crucial to keep in mind when considering the outlook for price developments in this context. one concerns whether or not wage hikes at firms following the 2023 annual spring labor - management wage negotiations, which became more aggressive, are temporary or will continue in fiscal 2024 ( chart 11 ). on this score, there have been positive comments from both labor and management, mainly among large firms. by contrast, many local small and medium - sized firms have expressed concerns that this year's wage hikes were as much as they could manage, and that further increases will impair business continuity. thus, the outlook for wages is unclear at present. in light of unfolding demographic changes in japan, and also considering the unprecedented increase in the labor force participation rate of seniors and women, another scenario regarding wage developments can be considered : as constraints on labor supply intensify,

to the perception that my counterparty can fail because of lack of capital. we can do little about that. bis central bankers ’ speeches then there ’ s another dimension to this that has to do with the premia that are being charged on sovereign states borrowings. these premia have to, as i said, with default, with liquidity, but they also have to do more and more with convertibility, with the risk of convertibility. now to the extent that these premia do not have to do with factors inherent to my counterparty – they come into our mandate. they come within our remit. to the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate. so we have to cope with this financial fragmentation addressing these issues. i think i will stop here ; i think my assessment was candid and frank enough. thank you. bis central bankers ’ speeches