the bank decided to enable financial institutions to borrow funds from the bank up to an amount that is twice as much as the net increase in their lending. as for the latter, the bank decided to double the maximum amount of its fund - provisioning under the main rules from 3. 5 trillion yen to 7 trillion yen. under these facilities, financial institutions will be able to borrow funds at a fixed rate of 0. 1 percent per annum for four years. thus far, the loan support program has supported financial institutions ’ efforts to increase the total amount of their lending and has produced positive effects as a catalyst in regard to firms ’ and financial institutions ’ efforts to strengthen the foundations for japan ’ s economic growth. the bank expects that the enhancements made at the february mpm will further promote financial institutions ’ actions as well as stimulate firms ’ and households ’ demand for credit, with a view to encouraging banks ’ lending and strengthening the foundations for economic growth. d. developments in financial conditions and financial markets reflecting such policy measures, financial conditions in japan are accommodative. firms ’ funding costs have been hovering at low levels, with long - term average contract interest rates on new loans and discounts recording a historic low. issuing conditions for cp and corporate bonds have also been favorable. in addition, in a situation where the year - on - year rate of change in bank lending continues to increase, loans provided by shinkin banks have also been recording year - on - year positive growth since summer 2013. firms have continued to see financial institutions ’ lending attitudes as improving. firms ’ financial positions have also improved regardless of firm size. this was evidenced by the diffusion index for financial positions of small firms : the proportion of firms responding that their financial positions were “ easy ” exceeded the proportion of those responding that they were “ tight ” for the first time since the bubble period of the early 1990s. turning to developments in financial markets, yields on 10 - year jgbs – the benchmark longterm interest rate – have been stable at a low level of around 0. 6 percent as the bank proceeds with its jgb purchases. given that the year - on - year rate of increase in the cpi is currently around 1¼ percent, long - term real interest rates are presumed to be in negative territory. as for foreign exchange rates, the yen has been depreciating, albeit with some fluctuations. stock prices have been trending upward. meanwhile, according to the money stock statistics, the growth

steady - state inflation rate ; so, the important point is how this rate is affected. of course, it is possible that cost - push factors will remain, but whether they will push up the steady - state inflation rate is uncertain. second, related to the fact that cost - push inflation is unsustainable, the factors being addressed here are real factors, and it is not obvious what their impact on prices would be. if we think of prices as the price of goods and services relative to money, it would seem necessary to take monetary factors into consideration. third, when considering these issues within the framework of monetary policy, it is appropriate to consider the relationship between the natural rate of interest and market interest rates. to deem a real factor to be inflationary, we have to observe a tendency for the natural rate of interest to rise vis - a - vis market interest rates. in fact, however, the aforementioned real factors affect the natural rate of interest through various channels, and the rate can either rise or fall ( chart 6 ). 5 to give an example from demographics, because post - retirement households tend to draw down their savings, capital supply may decrease. this would push up the natural rate of interest. on the other hand, households anticipating longer life expectancies will seek to augment their savings accordingly, which may increase capital supply. this would lower the natural rate of interest. moreover, if the declining population reduces the labor force population, the per - capita capital equipment ratio will rise, leading to a fall in capital demand. this would also lower the natural rate of interest. we thus ought to say that the overall impact of demographics on the natural rate of interest is uncertain. furthermore, if uncertainties increase on the whole, this could motivate people to build up their precautionary savings, which in turn would boost capital supply. this would consequently lower the natural rate of interest. ii. looking back : history of monetary economics so far, i have not discussed the role of monetary policy. even though the natural rate of interest fluctuates, market interest rates are not necessarily determined accordingly. let me lay out the framework for my analysis. the current analytical framework has been developed gopinath ( 2022 ) considers the following seven channels through which the novel coronavirus ( covid - 19 ) pandemic will have enduring effects on the natural rate of interest : inequality, demographics, labor supply, productivity, savings and safe assets demand, debt in