of two to six fiscal years ahead average of six to ten years ahead average of four to five years ahead 0. 0 cy 2006 06 07 0. 0 14 15 cy 2009 note : survey respondents are asked to exclude the effects of the consumption tax hike for the whole period for the tankan, from the june 2013 survey for the household survey, and from the october 2013 survey for the esp forecast. the effects are irrelevant for the consensus forecasts. sources : consensus economics inc., " consensus forecasts " ; japan center for economic research ( jcer ) ; bank of japan. bis central bankers ’ speeches chart 5 households'inflation expectations and actual inflation ( 1 ) households'inflation expectations y / y % chg. five years ahead ( average ) one year ahead ( average ) - 2 2006 / 6 ( 2 ) actual inflation y / y % chg. cpi cpi ( excluding the direct effects of the consumption tax hike ) - 1 - 2 - 3 2006 / 2q 07 / 2q 08 / 2q 09 / 2q 10 / 2q 11 / 2q 12 / 2q 13 / 2q 14 / 2q sources : ministry of internal affairs and communications ; bank of japan. bis central bankers ’ speeches chart 6 - 1 households'price rise tolerance di % pts % pts - 10 price rise tolerance di ( left scale ) - 20 perception di of present price levels ( right scale ) - 30 - 40 - 50 - 60 - 70 - 80 - 90 - 10 - 100 06 / 6 2006 / 6 07 / 6 08 / 6 09 / 6 10 / 6 12 / 6 11 / 6 13 / 6 14 / 6 notes : 1. price rise tolerance di = ( " price rise is rather favorable " and " price decline is rather unfavorable " respondent ratio - " price rise is rather unfavorable " and " price decline is rather favorable " respondent ratio ) / ( valid respondent ratio - " have remained almost unchanged " respondent ratio ). 2. perception di of present price levels = ( " have gone up significantly " * 1 + " have gone up slightly " * 0. 5 ) - ( " have gone down slightly " * 0. 5 + " have gone down significantly " * 1 ). sources : ministry of internal affairs and communications ; bank of japan. chart 6 - 2 households'income di - 20 % pts - 25 - 30 - 35 - 40 - 45 - 50 income di ( present ) -

the effectiveness of qqe on economic activity real gdp growth rates during the two years after the introduction of qqe were around 1. 6 percent in fiscal 2013 ( excluding the effects of the tax hike ), which significantly exceeded the potential growth rate ( the bank ’ s estimate of about 0. 5 percent or lower ), and around 0. 2 percent in fiscal 2014, which was roughly equivalent to the potential growth rate. this positive performance reflects both the fiscal stimulus measures and the impact of monetary easing. let me briefly summarize the transmission mechanism of qqe on economic growth. the bank estimates that large - scale asset purchases under qqe succeeded in lowering long - term real interest rates by around 0. 7 to 0. 9 percentage point – or slightly less than 1 percentage point – cumulatively over the past two years. this decline in real interest rates encouraged private consumption and business fixed investment, and was also associated with a depreciation of the yen and a stock price rise – resulting in favorable corporate profits and an increase in nominal compensation of employees. given the expected effect of the unusually large - scale monetary easing, some of you may consider that, excluding the impacts of the tax hike, real gdp should have expanded more impressively over the past two years. in this regard, i view that a further expansion of private consumption was constrained to some extent by the following : ( 1 ) dissolution of the special level of pension benefits from the second half of fiscal 2013 ; ( 2 ) a cut in real pension benefits and a decline in real wages ( both owing to moderate inflation excluding the direct impact of the tax hike ) ; and ( 3 ) the severe weather around the summer of 2014. as for business fixed investment, the increase was less than initially expected owing to cautious investment behavior of firms, mainly domestic demand - oriented firms, due in part to sluggish domestic sales. exports has picked up from the second half of fiscal 2014, mainly to the united states. however, they did not increase as much as initially projected owing in part to a shift of production sites overseas, a decline in international competitiveness in some industries, sluggish recovery in overseas economies, and the j - curve effect. in addition, the effects of expanding domestic demand induced by front - loaded consumption and business fixed investment were somewhat diminished since a sustained rise in inflation expectations was not observed ( as described later ). these factors are considered to have partly offset the effectiveness of monetary easing and resulted in lower