prefecture is working on strengthening support for tourism products and services aimed at promoting tours and extending visitors ’ stay by providing subsidies to private business operators. in addition, hiroshima prefecture, together with the six neighboring prefectures, set up in spring last year the “ setouchi dmo ” — a destination management / marketing organization to promote tourism in the wider region. members include regional financial institutions that provide support from the funding side. i place great trust in the active cooperation among industry, government, and the financial sector toward boosting the tourism industry of the setouchi region. the bank will strive to contribute to these efforts toward the revitalization of the region through extensive information gathering and analyses by its hiroshima branch. in closing, let me express my sincere hopes for the further development of hiroshima prefecture ’ s economy and convey my best regards. thank you. 8 / 8 bis central bankers'speeches

expected to increase moderately, but it is subject to various uncertainties. for example, with regard to the u. s. economic policies, heightened uncertainties concerning fiscal policy and the impact of the pace of the policy interest rate hike on global capital flows warrant attention. the following are also considered as risks : developments in emerging and commodity - exporting economies ; negotiations on the united kingdom ’ s exit from the european union ( eu ) and their effects ; prospects regarding the european debt problem, including the financial sector ; and geopolitical risks. if these risks were to materialize, they could exert downward pressure on economic activity. therefore, the bank will continue examining these developments thoroughly. ii. price developments and their outlook price developments let me move on to the price developments in japan. although energy prices had exerted downward pressure on prices since the second half of 2014, they have been pushing up prices reflecting a pick - up in crude oil prices since last spring. against this backdrop, the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food turned positive in january 2017 for the first time in 13 months, and rose to 0. 4 percent in may ( chart 7 ). nevertheless, when excluding the effects of energy prices, price developments in japan have been relatively weak. the year - on - year rate of increase in the cpi excluding fresh food and energy has remained on a decelerating trend after marking a peak of 1. 2 percent at end - 2015, and has been at around 0 percent lately. this is partly attributable to temporary factors such as a reduction in sales prices of and charges for mobile phones. however, as i will explain later, the fact that increases in wages and prices have been sluggish, despite tight labor market conditions and high corporate profits, also affects price developments. outlook for prices as i have explained, the recent developments in prices have been relatively weak. however, i believe that we can expect to see a turnaround in such developments going forward. specifically, the year - on - year rate of change in the cpi is likely to continue on an uptrend and increase toward 2 percent, which is the bank ’ s price stability target. this is expected to be realized through the following mechanism. first, prices of items such as processed food and daily necessities — which are responsive to economic activity — are likely to rise gradually as private consumption increases its resilience, and the