Second, the continued risk-on trend and gradual rise in U.S. long-term interest rates, as well as strong monetary easing by the Bank, will support accommodative financial conditions, reflected even in asset prices and foreign exchange rates.
Third, this will encourage firms’ positive initiatives to make fixed investment and implement structural reforms, which will in turn bring a gradual rise in the potential growth rate of Japan’s economy. Fourth, on the expectation of sustainable economic recovery, firm household spending should be maintained and prices should gradually increase accompanied by the narrowing of the negative output gap.