The outlook for economic activity and prices has improved and stock prices have risen by more than 30 percent since the beginning of the year. While these should be factors that lead to increases in long-term interest rates, Japan’s long-term interest rates have declined from about 0.8 percent as of the beginning of the year to less than 0.7 percent.
These rates have declined since end-May, even in a situation of long-term interest rates in the United States and many other countries having substantially increased across the board. The break-even inflation rate and expected inflation rates judged from various surveys have been increasing. Thus, the QQE has been exerting its intended effects and Japan has been steadily moving toward overcoming deflation.