Of course, these changes cannot entirely be attributed to the effects of QQE implemented by the Bank of Japan. However, it can be judged that QQE has been producing its intended effects through the transmission mechanism envisioned at the time of its introduction. Let me review the transmission mechanism of QQE.
Japan’s monetary policy has been constrained for a long time by the zero lower bound on short-term nominal interest rates. In this situation, QQE aims to achieve further easing effects by reducing long-term real interest rates. Specifically, the mechanism is as follows.