When the Bank raises or lowers interest rates, it takes about 12 months for this change to have its peak impact on aggregate demand and about 18 to 24 months to fully affect inflation.
In addition, although Japan's financial system has maintained stability on the whole, financial conditions have become less accommodative in terms of corporate financing, as seen in deterioration in firms' financial positions. II. Conduct of Monetary Policy Next, I will explain the Bank's conduct of monetary policy.