The unemployment rate of 3.6 percent is equivalent to the level registered in July 2007 before the Lehman crisis. This leads me to conclude that the rise in inflation we observe after the QQE is characterized by demand-pull rather than cost-push, as it accompanies an expansion of the real GDP and an improvement in employment.
In Japan, in the midst of prolonged deflation since the latter half of the 1990s, people’s inflation expectations declined and deflationary expectations were firmly embedded in society. One of the striking features of the QQE is that it sets the overcoming of such deflationary expectations by working directly on people’s expectations, or the lifting of their inflation expectations, at the center of policy effects.