Inflation expectations -- which play a key role in achieving the price stability target of 2 percent -- weakened, reflecting the headwinds for the global economy that I mentioned earlier, after having remained more or less flat amid the significant decline in crude oil prices (Chart 2).
The Introduction of a Negative Interest Rate and Its Effects It was against these backgrounds that the Bank introduced "QQE with a Negative Interest Rate" in January 2016 in order to address these strong headwinds and achieve the price stability target of 2 percent. To reduce real interest rates amid weakening inflation expectations, nominal interest rates needed to be lowered further.