However, if the credibility of fiscal management were to wane and QQE to become widely perceived in financial markets as financing fiscal deficits, this could entail a risk that the effects of QQE will be constrained by a rise in interest rates brought about by an increase in risk premiums.
Particular attention therefore should be given to this as a potential risk, because fiscal conditions are severe in Japan compared with other countries. Fiscal consolidation is also extremely important with regard to achieving the smooth normalization of monetary policy in the future.