After the success of the QQE, people’s medium- to long-term inflation expectations will be anchored at around 2 percent, and the Bank might possibly start moving toward an exit. Market participants will notice signs of change in economic activity and monetary policy. Under those circumstances, nominal long-term rates might start to adjust, well before the actual changes in policy.
In the OECD countries, the fiscal position is set to deteriorate from -3.2 per cent in 2008 to -7.7 per cent in 2009 and further to -8.8 per cent in 2010. The fiscal deficit is poised to more than double in the US, Japan and the Euro area in 2009 and further deteriorate in 2010.