As described in the January 2016 Outlook Report, Japan’s economy has continued to recover moderately and the underlying trend in prices has been rising steadily. Recently, however, global financial markets have been volatile against the backdrop of the further decline in crude oil prices and uncertainty such as over future developments in emerging and commodityexporting economies, particularly the Chinese economy.
In this situation, the Bank judged that there was an increasing risk that an improvement in the business confidence of Japanese firms and conversion of the deflationary mindset might be delayed and that the underlying trend in prices might be negatively affected.