next year remains very unclear. i therefore think it is necessary to carefully examine their developments. there is absolutely no need for pessimism, though. the ratio of break - even point to sales, calculated from the financial statements statistics of corporations by industry, annually has come down significantly ( chart 9 ). this shows that firms'earning power has been boosted substantially, and that they are making headway in improving their fundamental business structure to achieve higher profitability. in other words, firms'fundamental business structure has become more conducive to wage hikes, in line with the improvement in their earning power. given these factors, the extent of wage hikes in 2025 will ultimately be determined by business performance in fiscal 2024, which in turn depends on whether there will be greater room for expansion in external demand and business fixed investment. ii. conduct of monetary policy steps toward normalizing monetary policy so far, i have talked about japan's economic and price developments. i would now like to move on to explaining the bank's current conduct of monetary policy and share my thoughts on the bank's policy stance after the termination of the negative interest rate policy and yield curve control. with respect to the current conduct of monetary policy, the bank decided at the march 2024 mpm to ( 1 ) terminate the negative interest rate policy and yield curve control, and ( 2 ) shift to a framework in which it conducts monetary policy by guiding the short - term interest rate, the uncollateralized overnight call rate, as a primary policy tool. subsequently, at the july mpm, the bank decided to raise the uncollateralized overnight call rate by 0. 15 percentage points, encouraging it to remain at around 0. 25 percent. it also decided on a plan to gradually reduce its monthly purchase amount of japanese government bonds ( jgbs ) so that it will be about 3 trillion yen in january - march 2026 ( charts 10 and 11 ). with these measures, the bank is proceeding with efforts to normalize monetary policy, aiming to achieve the price stability target of 2 percent in a sustainable and stable manner. it seems to me that some people may have doubts about the current conduct of monetary policy, as to whether the bank was premature in entering into a normalization process of gradually raising its policy interest rate, and as to whether this step runs the risk of japan falling back into deflation. i would therefore like to share my thoughts on both of these points

them as a significant source of fixed costs. let me now move on to exports. despite the continuing depreciation of the yen, exports have shown mixed developments, affected by a lack of momentum in the chinese and european economies ( chart 5 ). rather than being affected by the price factor ( the weaker yen ), japan's exports have been greatly influenced by the quantitative factor ( overseas demand ), which is determined by developments in the global economy. global economic developments will therefore have to be taken into account when considering future developments in exports, as these, for the time being, entail uncertainties that should not be overlooked. u. s. economic policy may change drastically, depending not only on the outcome of the u. s. presidential election in november, but also on how the results of the concurrent congressional elections affect the balance of power between the parties in the two houses of congress. there may also be a substantial change in geopolitical risks. since developments in the international situation just mentioned entail the possibility of triggering a significant change in japan's corporate behavior, these developments warrant greater attention. b. price developments in japan 1. price situation i will now talk about price developments in japan. looking at recent price developments, it can be said that prices have thus far been on track, as the virtuous cycle between wages and prices has finally begun to operate. in other words, prices seem to be steadily following the path expected by the bank toward achievement of 2 percent underlying inflation. however, there now seem to be points that warrant some attention, although they do not yet suggest a need to change the bank's outlook. let me now share my view on prices. when examining price developments, i always adopt a method of separating the categories in the consumer price index ( cpi ) into two : " sticky " consumer prices, mainly composed of services prices for which the price changes relatively infrequently ; and " flexible " consumer prices, mainly composed of goods prices for which the price changes relatively frequently. 1 sticky consumer prices are significantly affected by wage developments, whereas flexible consumer prices are considerably affected by developments in yen - denominated import prices. based on this categorization, i would like to briefly outline developments in the cpi to date. the rate of increase in flexible consumer prices has decelerated considerably, mainly due to a pause in the rise in international commodity prices. on the other hand, sticky consumer prices have been rising in reflection of higher personnel