In order to make a breakthrough in this situation, the Bank introduced QQE in April 2013. This policy measure aimed at lowering the real interest rate by two means (Chart 8). The first is to raise inflation expectations through the Bank’s strong commitment to achieving the price stability target of 2 percent at the earliest possible time.
The second is to make use of the room for lowering the nominal interest rate. Although short-term interest rates already had declined to as low as 0 percent, long-term interest rates still had room to fall.