Members’ “understanding” centers at around 1 percent, which is the same as the medium- to long-term expected rates of inflation forecasted by economists. We expect that medium- to long-term expected rates of inflation are likely to remain stable going forward.
In this situation, the year-on-year rate of change in the CPI is expected to remain slightly positive with the aggregate supply and demand balance improving as a trend amid economic recovery. In the July interim assessment of the April 2011 Outlook Report, the median of Policy Board members’ CPI forecasts was an increase of 0.7 percent both for fiscal 2011 and 2012.