of the consumption tax hike scheduled to take place in october 2019. the planned increase in the tax rate is smaller than that at the time of the previous hike in april 2014, and the government plans to implement measures such as a reduced tax rate, a point reward program when using cashless payments, and more flexibly passing on the rise in the consumption tax to sales prices. taking these into consideration, the baseline scenario is that the negative impact of the tax hike on the growth rates will be smaller than that of the previous hike. nevertheless, i am paying attention to future consumption, together with possible further heightening in the current geopolitical risks. i would like to carefully examine the situation, including these two points, in the upcoming october outlook report. c. price developments 1. current situation next, i will turn to price developments in japan. the year - on - year rate of increase in the consumer price index ( cpi ) for all items less fresh food is currently at around 0. 5 percent ; it seems to have hit a lull somewhat in the uptrend, as the effects of energy price drops have started to appear. nevertheless, the general public's gut feeling seems to be that prices are rising gradually. i believe that this is affected by the rise in prices of food products, which are staple purchases. actually, the year - on - year rate of change in the cpi saw an acceleration in its growth for an increasing number of food products since early spring ; in addition, the unit value price index released by hitotsubashi university ( sri - hitotsubashi consumer purchase index ) and the nikkei cpinow - t index, both of which are calculated based on point - of - sales ( pos ) data collected at supermarkets, for example, maintained their high growth. as described in the comprehensive assessment : developments in economic activity and prices as well as policy effects since the introduction of quantitative and qualitative monetary easing ( qqe ), which was released by the bank in september 2016, the adaptive component plays a considerably larger role in japan than in other countries in the formation of inflation expectations, which means that inflation expectations tend to be influenced by past inflation rates. a similar trend has been confirmed by subsequent studies. 1 in other words, it is important to make cumulative efforts to raise inflation rates ; as gertler pointed out, for an economy that barely has a history of inflation being anchored at a targeted rate, " they [ individuals ] have

jerome h powell : advanced economy monetary policy and emerging market economies speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the federal reserve bank of san francisco 2013 asia economic policy conference, san francisco, 4 november 2013. * * * i would like to thank trevor reeve for his assistance in the preparation of these remarks. i appreciate this opportunity to offer a few thoughts on the effects of advanced economy monetary policies on emerging market economies ( emes ) – an issue of great importance for asia and the global economy. since the global financial crisis, the federal reserve has sought to strengthen the u. s. economic recovery through highly accommodative monetary policy. but my colleagues and i are keenly aware that the u. s. economy operates in a global environment. we understand that america ’ s prosperity is bound up with the prosperity of other nations, including emerging market nations. emerging market economies have long grappled with the challenges posed by large and volatile cross - border capital flows. the past several decades are replete with episodes of strong capital inflows being followed by abrupt reversals, all too often resulting in financial crisis and economic distress. 1 some of this volatility no doubt reflects the evolution of strengths and vulnerabilities within the emes themselves. in recent years, renewed attention has been placed on the role of advanced economies and of common or global factors in driving capital movements. 2 in particular, many observers have singled out monetary policy in the united states and other advanced economies as a key driver. as advanced economies pursued highly accommodative monetary policies and emes subsequently received strong capital inflows, reflecting investors ’ pursuit of higher returns, concerns were expressed that a flood of liquidity would overwhelm emerging markets, drive up asset prices to unsustainable levels, set off credit booms, and thus sow the seeds of future crises. more recently, there have been concerns about potential financial and economic dislocations associated with the advanced economies ’ eventual exit from highly accommodative policies. in my remarks today, i will discuss the extent to which monetary policy in the advanced economies – and in the united states in particular – has contributed to changes in emerging market capital flows and asset prices, and i will place this discussion in a broader context of economic and financial linkages among economies. i will also address the risks that emes may face from the eventual normalization of monetary policy in