. 5 percent. to achieve around 2 percent inflation, a further improvement in real wage growth is necessary. regarding the second feature of japan ’ s deflationary experience, a lack of healthy risktaking practices should be mentioned. households have accumulated their assets largely in the form of deposits. assessing in real terms, they have benefitted from relatively high interest rates and an increase in value of outstanding deposits, owing to the zero lower bound on nominal interest rates and mild deflation. setting aside whether households actually perceived this to be true, their risk - averse behavior has turned out to be rational. in the corporate sector, on the other hand, the expected returns on investment were so low that actions to improve profitability and to efficiently utilize their assets were limited. meanwhile, financial institutions concentrated their assets on government bonds and their supply of risk money necessary to support startup firms and business was limited. since the introduction of qqe, this situation has been gradually changing together with the government ’ s economic policies. households and financial institutions increasingly express interest in riskier assets and diversification of risks. banks are more eager to extend credits with innovative financial services. the number of initial public offerings has increased and firms are more active in business investment, mergers and acquisitions, and organizational rationalization both domestically and globally. it is important that the boj continue to support these positive developments by maintaining an accommodative monetary environment. iii. price developments and monetary policy in the asia - pacific region next, i would like to focus on the asia - pacific region, covering nine countries. among these nine, six ( australia, indonesia, new zealand, the philippines, south korea, and thailand ) have officially adopted an inflation - targeting framework ( chart 11 ). regarding the monetary policy frameworks of the region, i had an opportunity to speak in singapore in july 2014. 1 since then, economic and financial conditions have changed dramatically globally as well as in the region. thus, today i will briefly review recent developments. a. growing divergence in monetary policy in the asia - pacific region since the east asian economic crisis in the 1990s, central banks in the region have placed a greater emphasis on price stability than on exchange rate stability. specifically, six central banks took the lead on this by adopting an inflation - targeting framework with a clear numerical inflation target. under the framework, the realized inflation and inflation expectations of these six countries gradually showed a downward trend in line with their targets. the inflation - targeting framework in the

been high, particularly in straight bonds. growth in monetary aggregates in terms of m2 + cds year - to - year average outstanding has continued at around 3. 0 per cent. 3. looking at individual components of final demand, public - sector investment will be supported by implementation of public works included in the government ’ s supplementary budget for fiscal 1996 for the time being, but it is expected to follow a declining trend. net exports, on the other hand, are likely to continue to be steady even after the recent large increase. this reflects the robust increase in overseas demand, and the recovery in the price competitiveness of japan ’ s manufacturing industry supported by the yen ’ s depreciation until early spring. in these circumstances, corporate profits on the whole are expected to continue improving in fiscal 1997 although with varied strength across sectors. business fixed investment is also expected to continue increasing, mainly reflecting 1 ) increases in corporate profits, 2 ) further progress in capital stock adjustments, and 3 ) the rise in information - related investment. however, because of the remaining balance - sheet adjustment pressures and the absence of leading industries, the increase in business fixed investment is unlikely to gather significant momentum for the time being. the growth in the employees ’ income has been rising gradually owing to the increase in bonus payments and the moderate recovery in employment growth, reflecting the improvement in the labor market conditions. this shows that the recovery in the business sector has spread to the household sector. thus, recovery in personal consumption is expected to continue after the reaction to the rise in demand ahead of the consumption tax hike subsides in the near future. however, the pace of recovery is likely to be moderate considering the increases in the tax burden, such as the rise in the consumption tax. meanwhile, housing investment, which is in a generally favorable environment including low interest rates, is expected to recover somewhat in the second half of fiscal 1997, although it has recently been weak reflecting the reaction to the surge in demand ahead of the consumption tax hike. 4. with respect to price developments, the downward pressure on domestic prices from the increase in manufactured imports has weakened, as the rise in import penetration rate has paused. on the other hand, the upward pressure on import costs from materials prices has also subsided owing to the decline in crude oil prices since spring 1997 and the appreciation of the yen. thus, import prices are not exerting significant upward nor downward pressure on domestic prices. meanwhile, final demand will continue to recover on the whole,