The policy interest rate – the basis for producing forecasts In the most recent Outlook Report, the economic forecasts of Policy Board members were made taking account of market participants' expectations of future policy rates, which were deduced from market interest rates.
4 Under the quantitative easing policy, it was natural to base forecasts on the assumption that the policy interest rate would be constant until at least the year-on-year rate of change in the core CPI registered zero percent or higher on a sustainable basis. Under the current framework, however, this assumption would be rather unnatural.