An improvement in business sentiment due to a recovery in corporate profits, and ensuing cease of decline in wages and income, seem to have exerted positive effects on recent investment and consumption. In addition, there has recently been a marked increase in consumption of the baby-boom generation and other elderly people.
With some reflection, a grave trial for Japan’s economy, including progress in aging and the earthquake disaster, has also brought a substantial change in firms’ and households’ behavior. And that is becoming new buds for new demand. Let me explain that later in detail. As for the outlook, the Bank assumes that the firm domestic demand will support the moderate recovery of Japan’s economy.