As for the third reason, it is far more profitable to invest overseas than at home (Chart 11). The Bank hears from many corporate managers that there are only a few attractive investment opportunities at home. Unless we somehow manage to change this view, it will be difficult to stimulate business investment.
The flipside is that investment will increase if we are able to change this view. While the first stage of the monetary transmission channel is the process of encouraging a further decline in market interest rates, we also need efforts to raise “natural interest rates,” if I may use an economist’s jargon.