Therefore, the observed inflation rate is expected to rise gradually. Under these circumstances, inflation expectations will be pushed up by the “adaptive formation mechanism.” For the time being, however, the observed inflation rate is unlikely to accelerate, hovering at slightly negative or about 0 percent.
As a result, there is considerable uncertainty about the extent to which inflation expectations will rise through the “adaptive formation mechanism.” Against this background, it is imperative for the Bank to firmly maintain its commitment to achieving the price stability target of 2 percent at the earliest possible time from the viewpoint of the “forward-looking formation mechanism.” III.