Taking the median price forecast of the Policy Board members, the CPI year-on-year rate of change (excluding the impact of the tax hikes) is expected to reach 0.6 percent for fiscal 2013, 1.3 percent for fiscal 2014, and 1.9 percent for fiscal 2015 (Chart 15).
The pace of achieving 2 percent depends on the future movement of the Phillips curve, which appears to remain largely flat at this stage (Chart 16). The closer the medium- to long-term inflation expectations are to the 2 percent target, the larger the shift in the curve (Chart 2).