Meanwhile, it can be said that inflation expectations have been on a rising trend on the whole, as evidenced (1) by the rise in the diffusion index for output prices in the June 2013 Tankan as well as the rise in the inflation expectations of firms, households, and economists, and (2) by the upturn in market-related indicators following a halt in their decline.
Under these circumstances, real interest rates – calculated as nominal interest rates minus the expected inflation rate – have been on a declining trend. If inflation expectations were to rise, this would exert upward pressure on long-term interest rates.