Based on this recognition, the Bank has been pursuing aggressive monetary easing. The transmission of monetary easing can be divided into two stages. The first stage is the transmission of monetary easing effects from the realm of monetary policy to the financial environment in which firms and households can raise sufficient funds at low interest rates.
The second stage is the transmission of effects from the financial conditions to economic activity and prices; in other words, the extent to which firms and households actually take advantage of the accommodative financial conditions to actively increase their investment and spending. In the following, I will discuss the role of the Bank’s two programs in terms of these two stages.