The third channel is that the recent monetary easing measures, through their effect on business and household sentiment, will underpin the economy. The recent measures are likely to have been effective in stabilizing the sentiment of firms and households, which have been worried about the adverse effects of the slowdown in overseas economies and the appreciation of the yen.
Some key securitization markets, including those for nonconforming mortgages, continue to function poorly if at all. These developments in financial markets – which themselves reflect, in part, greater concerns about housing and the economic outlook more generally – have weighed on real economic activity.