In this way, a virtuous cycle from income to spending has been operating steadily in both the household and corporate sectors. With this mechanism intact, Japan’s economy is expected to continue its moderate recovery trend, and the effects of the decline in demand following the front-loaded increase are expected to wane gradually. Next I will discuss the household and corporate sectors, respectively.
If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration. Let me now explain our assessment in greater detail, starting with the economic analysis.