around 2 percent will likely be around fiscal 2018, which also is unchanged from the previous outlook report. in fiscal 2019, the rate of change is expected to remain at around 2 percent as inflation expectations rise. iii. risk factors for economic activity and prices going forward there are upside and downside risk factors to the baseline scenario for economic activity and prices that i have explained thus far. next, i would like to talk about the major risk factors. the largest risk factor for economic activity is developments in overseas economies. while it is true that the global economic growth momentum has been increasing, uncertainties regarding future developments have remained high. in particular, the u. s. economic policies and their impact on global financial markets warrant attention. the u. s. government has released the tax reform plan recently ; it is necessary to carefully monitor how the specifics of its economic policies as a whole and its initiatives toward implementing these policies will play out. with regard to developments in the financial markets, stock prices and the long - term interest rate have risen significantly since last autumn on the back of expectations for the new administration's aggressive policy conduct. in the meantime, there was a phase where they declined somewhat amid uncertainties regarding its economic policies. since the u. s. economic policies can largely affect not only its economy but also the global economy and financial markets, the new administration's policy direction and its effects warrant careful attention. in europe, there are noticeable risk factors such as ( 1 ) national elections scheduled to be held in some major economies, in addition to the presidential election held recently in france, ( 2 ) negotiations on the united kingdom's exit from the european union ( eu ) and their effects, and ( 3 ) prospects regarding the european debt problem, including the financial sector. in addition, developments in emerging and commodity - exporting economies as well as various geopolitical risks are uncertain. it is therefore necessary to continue to pay close attention to the possibility that these risk factors will affect the economy through volatility in global financial markets and possible deteriorations in people's sentiment. on the other hand, we also should keep in mind that, given that market participants and economic entities already factor these risks in to a certain extent, the economy could deviate upward from the baseline scenario through a rise in sentiment depending on how they play out. in addition to the risks mentioned earlier, developments in firms'and households'mediumto long - term inflation expectations warrant due attention as they would directly

new technologies, it is useful to form new networks composed of entities such as financial institutions and high - tech and venture companies that enjoy advantages in information technology and data usage. it is also important to ensure communication, cooperation, and sound competition among these entities. the third point is acquiring public ’ s trust regarding financial infrastructure. financial services using the internet and mobile terminal are spreading, but new types of threats to the financial infrastructure – such as hacking and cyber attacks – are gaining prominence. if concerns spread that countermeasures against these threats are insufficient, this might lead to doubts about the innovative financial services themselves. therefore, providers of new financial services should prepare sufficiently against new risks and threats. in this regard, it will be important to draw on technologies that help to enhance security such as encryption techniques and biometric authentication. iii. the central bank and innovations in payments lastly, i would like to talk about the bank of japan ’ s involvement in payment and settlement systems and our perspective on innovations in payments. the bank issues banknotes, which are the most familiar type of payment instrument. we also operate the bank of japan financial network system, or boj - net, which enables the settlement of large - value funds and japanese government bonds among financial institutions. considering the fact that all funds are ultimately settled using central bank money – that is, cash or the central bank ’ s current account deposits – the settlement infrastructure provided by the bank serves as the essential infrastructure of the japanese economy. bis central bankers ’ speeches it is also crucial for the central bank to maintain stability and improve the efficiency of the payment and settlement systems, including those provided by the private sector. in this regard, the bank – through oversight of private - sector payment and settlement systems – monitors, communicates and, when necessary, encourages these systems to achieve stability and improve their functionality. concurrently, the bank has been enhancing its boj - net. in oct 2015, the new boj - net was fully launched. it is a highly flexible system that uses the latest information technology and offers enhanced accessibility, and thus it provides a powerful base for the development of innovations in payment and settlements and the provision of new financial services. furthermore, in february 2016, the boj - net extended its operating hours to 9 p. m. ( japan standard time ) to achieve an overlap with almost all asian markets during the day and with european markets until about noon. in addition, by taking part in a number of forums that discuss issues related to payment