If the government can effectively deliver two other arrows and create real demand, that would underpin the virtuous cycle. It would enable the Bank to achieve the price stability target more smoothly. The government has already started various initiatives, and I have high hopes for more to follow.
At the same time, to continue with quantitative and qualitative monetary easing, it needs to be recognized by the public that the Bank’s purchase of JGBs is carried out solely to achieve the price stability target and not in any way to finance the fiscal deficit. To that end, it is critical to maintain fiscal credibility.