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Quantitative and Qualitative Monetary Easing: Assessment of Its Effects in the Two Years since Its Introduction


  • Monetary Affairs Department

    (Bank of Japan)


Two years have passed since the Bank of Japan introduced quantitative and qualitative monetary easing (QQE) in April 2013. This article considers attempts to assess the effects of QQE on Japan's economic and financial developments during this period. The start of the transmission mechanism of QQE is as follows: (1) inflation expectations will be raised through a strong and clear commitment to the price stability target of 2 percent and large-scale monetary expansion to underpin the commitment; and concurrently, (2) downward pressure will be put on the entire yield curve through the Bank's massive purchases of Japanese government bonds (JGBs); thereby (3) decreasing real interest rates. On that basis, the assessment of QQE's effects was made in the following two stages: in the first stage, the degree of the decline in real interest rates was gauged; and in the second stage, the extent to which the decline in real interest rates affected economic activity and prices was assessed. The results of the assessment could be judged to be that (a) QQE lowered real interest rates by slightly less than 1 percentage point and (b) the actual improvement in economic activity and prices was mostly in line with the mechanism anticipated by QQE. Recently, however, the year-on-year rate of increase in the consumer price index slowed, mainly due to the effects of the decline in crude oil prices. Looking ahead, due attention needs to be paid to how the decline in the actual inflation rate will affect inflation expectation formation.

Suggested Citation

  • Monetary Affairs Department, 2015. "Quantitative and Qualitative Monetary Easing: Assessment of Its Effects in the Two Years since Its Introduction," Bank of Japan Review Series 15-E-3, Bank of Japan.
  • Handle: RePEc:boj:bojrev:rev15e03

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    Cited by:

    1. Hattori, Masazumi & Yetman, James, 2017. "The evolution of inflation expectations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 53-68.

    More about this item


    Monetary policy; real interest rate; inflation expectations;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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