continue on a moderate increasing trend. the year - on - year rate of change in the cpi ( all items less fresh food ) is likely to increase toward around 2 percent. this is because, although upward pressure of energy prices is likely to wane gradually, firms are likely to gradually shift their stance toward raising wages and prices with an improvement in the output gap, and inflation expectations are expected to accelerate moderately. in the short run, the rate of increase in prices of food products and goods related to daily necessities in particular is expected to accelerate gradually with a moderate increase in private consumption, and moves to pass on the increase in labor costs to prices of general services, including dining - out and housework - related services, are likely to prevail. looking at the medians of the policy board members'forecasts in the october 2017 outlook report, the year - on - year rate of change in the cpi ( all items less fresh food ) is projected to be 0. 8 percent for fiscal 2017, 1. 4 percent for fiscal 2018, and - - on a basis excluding the effects of the scheduled consumption tax hike - - 1. 8 percent for fiscal 2019. i believe that there are the following upside and downside risks to the outlook. risks to japan's economic activity are developments in overseas economies, such as the u. s. economic policies and geopolitical risks, firms'and households'medium - to long - term growth expectations, as well as fiscal sustainability in the medium to long term. risks to prices are developments in firms'and households'medium - to long - term inflation expectations, the fact that there are items for which prices are not particularly responsive to the output gap, as well as developments in foreign exchange rates and international commodity prices going forward. i hold the view that, while downside risks to japan's economic activity are limited, those to prices are fairly significant. this is particularly so because of the considerable uncertainty as to how far firms will adopt a shared attitude toward raising prices. ii. the bank's monetary policy next, i will talk about the bank's monetary policy. with a view to achieving the price stability target of 2 percent, the bank has been maintaining highly accommodative financial conditions by pursuing strong monetary easing. a. quantitative and qualitative monetary easing ( qqe ) with yield curve control the framework of qqe with yield curve control the bank has adopted consists of two major components.

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