Inflation expectations judged from break-even inflation rates calculated from the yield of inflation-indexed bonds and various surveys have been rising (Chart 10). As a result, real interest rates have declined, thereby stimulating private demand. Against this backdrop, the virtuous cycle among production, income, and expenditure has kept the growth momentum intact and Japan’s economy has continued to recover moderately.
Real GDP growth has been positive for six consecutive quarters (Chart 11). On the inflation front, the year-on-year rate of change in the CPI (excluding fresh food), which was minus 0.5 percent when QQE was introduced, as of May this year has risen to plus 1.4 percent excluding the direct effects of the consumption tax hike.