Risks to prices Risks specific to prices include (1) uncertainties over firms' price-setting behavior amid the impact of COVID-19 on both the demand and supply sides of economic activity and (2) future developments in foreign exchange rates and international commodity prices. I believe that greater emphasis needs to be placed on both of these risk factors.
Regarding the first risk, it is not assessed at present that price cuts that aim at stimulating demand have been observed widely, since one of the reasons for the current decrease in demand due to constrained economic activity is vigilance against COVID-19.