Under these circumstances, real interest rates – calculated as nominal interest rates minus the expected inflation rate – have been on a declining trend. If inflation expectations were to rise, this would exert upward pressure on long-term interest rates.
The key to strengthening monetary easing effects therefore lies in maintaining real interest rates at a relatively low level, by exerting downward pressure on nominal interest rates through a compression of risk premiums (including term premiums). As for the outlook, downward pressure on interest rates is likely to become increasingly pronounced as the Bank proceeds with its large-scale JGB purchases.