While I have thus far explained the baseline scenario for economic activity and prices, the Bank is also fully aware of the risks concerning such scenario. Upside risks to the scenario are developments in emerging and commodity-exporting economies. The robust growth of emerging and commodity-exporting economies has driven the pick-up of Japan’s economy.
Those restraining forces were more evident in goods-price inflation, which in the CPI slowed substantially to only about ½ percent in 1997, than on service-price inflation, which moderated much less -- to around 3 percent. Providers of services appeared to be more pressed by mounting strains in labor markets.