##nated during that period. while there have been various views to explain what caused deflation, we have to note with the utmost seriousness that only japan fell into prolonged deflation among advanced economies, the rest of which achieved inflation of around 2 percent for most of the time. 5 however, under the bank's price stability target of 2 percent, japan's economy is no longer in deflation. since the introduction of qqe in april 2013 in particular, the inflation rate on average has increased from around 0. 5 percent in negative territory to around 0. 5 percent in positive territory. this improvement was achieved under the bank's clear commitment to the 2 percent target and the monetary easing pursued in line with it ( chart 9 ). b. cause of low interest rates : decline in the natural rate of interest that being said, the inflation rate has not yet reached 2 percent, being in the range of 0. 5 - 1. 0 percent when excluding fresh food, and therefore the bank's monetary easing has continued for a long period of time. in this situation, there are requests for higher interest rates. some may think that the bank can raise interest rates because it can control them as it wants. but the reality is not that simple. 6 kataoka goushi, nihon no " ushinawareta 20 - nen " : defure o koeru keizai seisaku ni mukete ( tokyo : fujiwara - shoten, 2010 ) ; masazumi wakatabe, japan's great stagnation and abenomics : lessons for the world ( new york : palgrave macmillan, 2015 ) ; takenaka heizo, heisei no kyokun : kaikaku to gusaku no 30 - nen ( tokyo : php institute, inc., 2019 ) ; and iwata kikuo, naze defure o hochi shite wa ikenai ka : hitode busoku keizai de yomigaeru abenomikusu ( tokyo : php institute, inc., 2019 ). for one example as an answer to the same question in the united states, see stanley fischer, " why are interest rates so low? causes and implications, " remarks at the economic club of new york, october 17, 2016, https : / / www. federalreserve. gov / newsevents / speech / fischer20161017a. htm. why

labor demand decrease in labor supply wages wages labor supply curve labor supply curve up up labor demand curve labor demand curve decrease increase quantity of labor quantity of labor chart 5 effects of qqe : financial conditions amount outstanding of private - sector funding lending attitudes of financial institutions as perceived by firms di ( " accommodative " - " severe " ), % points introduction of qqe introduction of qqe tril. yen - 10 large enterprises - 20 small enterprises - 30 cy 95 cy10 notes : 1. in the left chart, figures are based on the tankan. all industries. there is a discontinuity in the data in december 2003 due to a change in the survey framework. notes : 2. the right chart shows the sum of loans ( domestic private banks and shinkin banks ), cp, and corporate bonds. loans outstanding among domestic private banks are adjusted for notes : 2. special items, such as the foreign exchange rates. sources : japan securities depository center ; i - n information systems ; bank of japan, etc. chart 6 effects of qqe : economic activity and prices consumer price index output gap % y / y % chg. actual ( less fresh food and energy ) without qqe actual without qqe - 1 - 2 - 3 simulation - 4 - 1 - 5 simulation - 6 - 7 cy01 - 2 cy 01 note : for details of the simulation, see footnote 2 in the main text. sources : bloomberg ; ministry of internal affairs and communications ; bank of japan, etc. chart 7 recent developments in overseas economies and japan's production world trade volume and global manufacturing pmi y / y % chg. japan's industrial production s. a., di. s. a., cy2015 = 100 world trade volume ( left scale ) - 2 global manufacturing pmi ( right scale ) - 4 cy 12 cy12 note : in the left chart, figures for the trade volume are those for real imports. figures for the global manufacturing pmi are the " j. p. morgan global manufacturing pmi. " sources : cpb netherlands bureau for economic policy analysis ; ihs markit ( © and database right ihs markit ltd 2019. all rights reserved. ) ; ministry of economy, trade and industry. chart 8 outlook for economic activity boj's forecasts of real gdp imf projections for major economies ( as of april 2019 ) ( april 2019 outlook report ) y