Since these supply-side measures work on the incentives of firms and households, it thus often takes time for effects to materialize unlike measures working on the demand side. Even if it takes time, I am not pessimistic about the future of the Japanese economy.
It is expected that the CPI inflation rate would be in the range of 7.7-8.3 percent in FY06. Underlying these trends is the expectation that (i) monetary policy will remain tight, (ii) domestic fuel prices will not rise further in the remaining months of the fiscal year, and (iii) supply of essential products would be managed effectively.