Looking ahead, the labor market is likely to continue tightening as the economy continues to recover and, as I will discuss later, corporate profits are expected to improve and inflation expectations are likely to increase. Therefore, the year-on-year rate of increase in nominal wages is expected to gradually show a clear uptrend.
Against the backdrop of these employment and income developments, the virtuous cycle of economic activity in the household sector is expected to remain in place. Nevertheless, the Bank will continue to carefully examine how the decline in real income that the consumption tax hike has brought about affects households’ spending behavior. Corporate sector Next, I will explain the virtuous cycle in the corporate sector.