In this regard, I consider that firms' and households' medium- to long-term inflation expectations are mainly determined by supply-side factors – or, the economy's growth potential – such as the potential growth rate and the productivity growth rate, rather than by factors such as the following: the level of the Bank's price stability target; the supply and demand balances in goods and services, as well as in the labor market; and developments in the actual inflation rate.
In light of this view, I think that the price stability target of 2 percent is well above the level that is consistent with the growth potential of Japan's economy.