The first is whether the stability of the financial system is being maintained. Looking back in history the cases in which price declines caused a contraction in economic activity, most cases coincided with the period of significant financial system instability, as typified during the U.S. Great Depression in the 1930s.
Japan's financial system has so far been generally stable, and in that regard the Bank does not judge that the risk of the economy falling into a deflationary spiral has increased. And the second is whether firms and households' inflation expectations in the medium to long term decline.