leading to a further expansion of production and income – would make more progress as we move forward. concluding remarks in conclusion, let me touch on the economy of miyagi prefecture. the regional economy is recovering moderately, with the decline in demand affected by the consumption tax hike waning gradually. somewhat weak developments in production will continue. reflecting the demand resulting from rebuilding and reconstructing, public investment has been increasing and housing investment has remained at a high level, particularly for building public housing for people affected by the disaster. business fixed investment has also continued to be on an increasing trend and private consumption has remained resilient on the back of an improvement in the employment and income situation. looking at reconstruction in the disaster - stricken areas, i have recognized that while reconstruction has been steadily progressing, rebuilding day - to - day life and rehabilitation of livelihood are still half - way through. the pace of reconstruction differs between the regions and the difference between the regions seems to have been widening. at the root, there seems to be also a challenge that is common nationwide, namely, the declining population and aging. in addition, a labor shortage and prices of materials rising or remaining at high levels have been affecting not a little the progress in reconstruction in the disaster - stricken areas. how that will develop going forward also warrants due attention, in my view. i have heard that big events are scheduled for this year in miyagi prefecture. sendai city will host next month the united nations world conference on disaster risk reduction, the cumulative number of participants of which is expected to be more than 40, 000, and has announced itself as a candidate for the 2016 summit meeting. the city has disclosed its plans to develop in the future as an international convention city as well as has aggressively been trying to tap inbound demand. an improvement and reinforcement of transportation infrastructure will be promoted. the jr ishinomaki and sengoku lines that have been cut off by the disaster are scheduled to be reopened throughout, the tozai subway line is expected to open in sendai city, and the privatization of the sendai airport is being pursued. i expect that, triggered by those events and creating and tapping new demand, a stream of bis central bankers ’ speeches reconstruction will further accelerate and vitalization of the local economy will gain momentum. the bank conducts an operation that provides long - term funds at a low interest rate to financial institutions that have business offices in the disaster - stricken areas in order to support their efforts to meet

policy regime change – as an ignition point – will expand aggregate demand through multiple channels. c. reasons of the bank ’ s expansion of the qqe given the aforementioned view, you could naturally understand why the bank expanded the qqe at the end of october last year ( chart 9 ). the consumption tax hike in april last year brought about substantial fluctuations in the economy, that is, a front - loaded increase in demand immediately before the hike and a subsequent decline after the hike. as somewhat weak demand, mainly for durable consumer goods like automobiles, was protracted, a substantial decline in crude oil prices also exerted downward pressure on prices ( chart 10 ). weakness in demand associated with the consumption tax hike already waned, and the decline in crude oil prices will likely, over time, have a favorable impact on japan ’ s economy and work to put upward pressure on prices. however, as developments in actual prices and inflation expectations will mutually feed back, if there is downward pressure on actual prices, even for a short term, we should take a risk into account that it will delay the conversion of the deflationary mindset. to preempt manifestation of such risk and to maintain the improving momentum of expectation formation, it was necessary to expand the qqe. that was the judgment the bank made at the end of last october. d. how to evaluate employment and wage developments as aggregate demand expands, ignited by a rise in inflation expectations, a virtuous cycle from production to income and spending operates, and thereafter, stable employment and an improvement in labor conditions would ensue. in that regard, as mentioned earlier, an improvement in the labor market conditions since last year, such as a sizable increase in the number of employees and a substantial improvement in the unemployment rate and the active job openings - to - applicants ratio, has not been interrupted even amid the seemingly lackluster real gdp growth due to the effects of the consumption tax hike ( chart 11 ). as for the increase in the number of employees, there is criticism noting that only non - regular employment was increasing in number while regular employment was not. however, that criticism seems to mix up a forward - looking development of “ gradually increasing employment starting from non - regular employment, ” which has been occurring as the pie of employment as a whole has been expanding, with a backward - looking development of “ replacing regular employment with non - regular employment, ” which had been seen in the past. it is natural that