The framework for the conduct of monetary policy that the Bank of Japan adopted when it terminated the quantitative easing policy in March 2006 was constructed with these inflation dynamics in mind, and in full awareness that they may evolve further in the future.
In addition, if financial conditions in Japan, as reflected in lending attitudes of financial institutions and issuing conditions in the CP and corporate bond markets, should increase in severity, pressures acting to depress economic activity from the financial side might become more marked.