The negative rate policy challenged market expectations that when rates reached zero they could only go up and not down, which helped skew the distribution of rate expectations and depress the short end of the risk-free curve – a key benchmark for the pricing of bank loans.
With regard to exogenous demand, public investment is about to decrease since the implementation of the supplementary budget for fiscal 1999 has peaked out. Net exports (real exports minus real imports) continue to follow a moderate upward trend due to steady developments in overseas economies. As regards domestic private demand, business fixed investment is on an increasing trend.