As such efforts proceed and growth expectations pick up, firms’ profit prospects will improve, the expected rates of return on new investments will increase, and firms will become more proactive in their spending such as on investment. Once such a virtuous circle has taken hold, the accommodative financial conditions will have even stronger effects, and the virtuous circle will become more sustainable.
This is what we aim to achieve at the second stage of the transmission mechanism of monetary easing. In terms of creating a favorable business environment, the government also plays an important role.