It appears that the worst scenarios regarding prospects for the global economy and financial system are no longer quite so prominent in the minds of market participants. This offers us a unique window of opportunity both for short-term actions to stabilise institutions and promote credit extension, and for implementing measures to strengthen the system for the longer term.
As people have gained the collective experience of increases in wages and prices in the past few years, it is likely to contribute to pushing up inflation expectations going forward. In this way, the momentum toward achieving the price stability target has been maintained, whereby a positive output gap results in an increase in actual prices, leading to a rise in inflation expectations.