Interest rates on term instruments and lending rates have declined further (Chart 11). As a whole, firms’ funding costs through bank loans and the issuance of CP and corporate bonds have declined to record low levels. Moreover, long-term bond yields have been declining steadily. In particular, the yields on JGBs up to three years have declined and flattened.
Furthermore, the financial market remained resilient after the Great East Japan Earthquake of 2011, partly because the Bank reacted quickly with a prompt injection of massive liquidity to the financial system in order to preempt possible deterioration in investors’ confidence. By means of an event study, it has been empirically demonstrated that the CME policy has a positive impact on financial markets.