With this mechanism operating, the inflation rate -- specifically, in terms of the median of the Policy Board members' forecasts for the year-on-year rate of change in the CPI (all items less fresh food) -- is projected to rise to around 1.8 percent through fiscal 2019, excluding the direct effects of the consumption tax hike (Chart 4).
In contrast to this baseline scenario, I consider that the possibility of the year-on-year rate of change in the CPI increasing to 2 percent through fiscal 2019 is low at this point. This difference in the price outlook reflects the discrepancy in how to view the overall effectiveness of the current monetary easing policy and the functioning of the policy's transmission channels.