The policy has been having its intended effects. Under the Bank’s large-scale purchases of government bonds, long-term interest rates have been stable. At the same time, inflation expectations have been rising on the whole, so that real interest rates – that is, nominal long-term interest rates minus the expected rate of inflation – have declined, thereby stimulating private demand.
As a result, the output gap has improved and inflation has accelerated. Looking ahead, with this mechanism at work, the year-on-year rate of increase in the CPI and inflation expectations are expected to increase.