D.  Transmission mechanism for achieving the 2 percent target under QQE  Impact on economic activity and prices Regarding the transmission mechanism of monetary easing on economic activity under QQE, several channels have been considered. With the first channel, the purchase of assets continues to exert downward pressure on long-term nominal interest rates and the risk premia of risk asset prices (Chart 8).
This channel would contribute to increasing firms’ business investment, households’ durable consumption and residential investment by (1) a decline in the funding cost of firms and households, (2) improvement in firms’ balance sheets, and (3) the wealth effect.