For the last six months since it introduced the QQE, the Bank has been progressing with the provision of the monetary base and the purchase of JGBs as scheduled (Chart 12). The effects of the QQE are expected to carry through the economy via several different routes. The most important of these is to lower real interest rates.
Here, I would like to spend some time to explain the mechanism behind this. First of all, by committing to achievement of the 2 percent price stability target at the earliest possible time and announcing the continuation of a new phase of monetary easing into the future to underpin that commitment, the Bank aims to drastically change people’s expectations and raise inflation expectations.