After the bubble burst, firms were negative toward undertaking fixed investment for a prolonged period, mainly against the background of the burden brought about by excess production capacity that was accumulated during the bubble period and of corporate profits remaining low under the following deflation.
This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will support a timely return of inflation to our two per cent medium-term target. Our future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.