This implies that the seemingly stable long-term inflation expectations of around 2 percent held by Japan’s households may simply be a result of the upward bias, rather than representing their true inflation expectations.
Under the presence of such a bias, households in Japan may perceive that a rate of actual inflation is much higher than 2 percent in the process of approaching the 2 percent price stability target, and regard such a price rise as unacceptable. One factor contributing to Japan’s larger upward bias may be a difference in future income prospects.