Chart 1

Real GDP Growth Rate and Output Gap

% y/y %
10 10

8 Output gap (left scale) 8

.
6 Real GDP (right scale) 6

4 4

2 2

0 0

-2 -2

-4 -4

-6 -6

-8 -8

-10 -10
1990 92 94 96 98 2000 02 04 06 08 10 12
Year
Sources: Cabinet Office; Bank of Japan.

Chart 2

Price Developments
y/y %
5

4 Core CPI (excluding fresh food)

3 CPI (all items)
2

-1

-2

-3

-4
1990 92 94 96 98 2000 02 04 06 08 10 12
Year
Source: Ministry of Internal Affairs and Communications.
 Chart 3
Current Account Balance at the Bank of Japan and Overnight Call Rate
% tril. yen
0.20 45

Uncollateralized overnight call 40

rate (left scale)
0.15
35

30

0.10
Final target
¥ 30-35 25
trillion
(right scale)
20
0.05

15

10
0.00

Initial target
¥ 5 trillion 5
(right scale)

-0.05 0
Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06

Source: Bank of Japan.

Chart 4
Impacts of the Quantitative Easing (QE) Policy

Expanding the size of Altering the asset

the balance sheet Forward guidance composition of the
(monetary base) balance sheet

Lowering the expectations 
Lowering the risk 
for the future path of 
premiums
short‐term interest rates
 Chart 5

Japanese Yen Exchange Rates

2000=100, reversed
40
Appreciation of the yen
60
Depreciation of the yen
80

100

120

140

160 Vis-à-vis U.S. dollar

Vis-à-vis euro
180
Nominal effective exchange rate of the yen

200
1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12
Year
Source: Bloomberg.
 Chart 6

Monetary Base in Major Economies

(1) Japan
Zero interest Comprehensive
tril.yen rate policy monetary easing % of GDP
150 50
140
130 In yen (left scale) Quantitative
120 easing 40 < 2012>
In % of GDP (right scale)
110 ¥ 123 tril.
100 26% of GDP
90 30
<1990>
80 ¥ 38 tril.
70 9% of GDP
60 20
50
40
30 10
20
10
0 0
1990 92 94 96 98 2000 02 04 06 08 10 12
Year
(2) United States
tril. U.S. dollars % of GDP
3.0 50

In U.S. dollars (left scale)

2.5
40
In % of GDP (right scale)

2.0 < 2012>

$ 2.6 tril.
30
17% of GDP
1.5 <1990>
$ 0.2 tril.
5% of GDP 20
1.0

10
0.5

0.0 0
1990 92 94 96 98 2000 02 04 06 08 10 12
Year

(3) Euro Area % of GDP

tril. euros
2.0 50
1.8
In euros (left scale)
1.6 40
1.4 In % of GDP (right scale) < 2012>
€ 1.7 tril.
1.2 30 18% of GDP
<2000>
1.0 € 0.5 tril.
7% of GDP
0.8 20
0.6
0.4 10
0.2
0.0 0
2000 01 02 03 04 05 06 07 08 09 10 11 12
Year
Sources: Cabinet Office; Bank of Japan; Federal Reserve; European Central Bank; Eurostat.
 Chart 7
Transmission Mechanism of Quantitative Easing (QE)

Monetary easing

Zero interest  Purchase of  JGBs 
rate policy and other assets

First
Forward guidance stage

Financial and capital markets
Bank T‐Bills Interbank Other financial 
loans JGBs transactions assets
Second 
stage

Real economy and general prices
 Chart 8
Bank Loans in Major Economies
(1) Japan
tril.yen % of GDP
1,000 140

900
In yen (left scale) 120
800
In % of GDP (right scale)
700 100

600
80

500

60
400

300 <1995> 40
¥ 535 tril.
<2012>
200 106% of GDP
¥ 398 tril.
84% of GDP 20
100

0 0
1995 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12
Year

(2) United States

tril. U.S. dollars % of GDP
14 140

<2012>
12 In U.S. dollars (left scale) $ 7.1 tril. 120
45% of GDP

10 In % of GDP (right scale) 100

8 80
<1995>
$ 2.4 tril.
34% of GDP
6 60

4 40

2 20

0 0
1995 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12
Year

(3) Euro Area

tril. euros % of GDP
14 140

12 In euros (left scale) 120

In % of GDP (right scale)

10 100

8 80

6 <2012> 60
€ 9.9 tril.
104% of GDP
4 40
<2000>
€ 5.3 tril.
82% of GDP
2 20

0 0
2000 01 02 03 04 05 06 07 08 09 10 11 12
Year

Sources: Cabinet Office; Bank of Japan; Federal Reserve; European Central Bank; Eurostat.
 Chart 9

Size of the Asset Purchase Program

tril. yen
120
Schedule
110 Maximum amount of the Program Dec.
101 tril.yen

100 Actual amount of increase Oct.

91 tril.yen End-Dec.
(2013)
90 Sep.
101 tril.yen
80 tril.yen

80 Apr.
Feb. (2012) 70 tril.yen
65 tril.yen
70 Oct.
55 tril.yen
60 Aug.
50 tril.yen
Started in Mar. (2011)
50 Oct. (2010) 40 tril.yen
35 tril.yen
40

30

20
9 12 3 6 9 12 3 6 9 12 3 6 9 12
2010 11 12 13
Note: Dates indicate the intended timescale for completing the increase.

Chart 10

Transmission Mechanism of the Comprehensive Monetary Easing (CME)

Monetary easing
Forward 
guidance

Zero interest rate policy Purchase of diverse assets

・JGBs, T‐Bills
・CP, Bonds
・ETFs, J‐REITs First
stage

Financial and capital markets

Second 
stage

Real economy and general prices
 Chart 11
Interest Rates
(1) Bond Yield Curves (2) Lending Rates on New Loans
% %
0.4 1.8

1.7
(a) Sep. 30, 2010 (before the CME policy)
Long-term
1.6
0.3
(a)
Short-term
(b) Dec. 12, 2012 1.5

1.4
0.2
1.3
(b)
1.2
0.1
1.1

Interest rate applied to the deposit facility (0.1%) 1.0

0.0 0.9
O/N 3M 6M 1Y 2Y 3Y 5Y 2007 0 8 0 9 1 0 1 1 1 2

Sources: Bank of Japan; Bloomberg.

Year
Chart 12

Demographic Changes in Japan

mil. of persons
140
Forecast

120

100

80

Children and elderly population

60
Working-age population (15-64 years)

40 Total population

20
1990 95 2000 05 10 15 20 25 30
Year
Sources: National Institute of Population and Social Security Research; Ministry of Internal Affairs and Communications.
 Chart 13
Total Fertility Rates in Japan, the United States, and Europe

3.0

2.8 Japan Germany

2.6
Italy United States
2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8
1990-94 95-99 2000-04 05-09
Year
Note: The figure refers to the number of children per woman if she bears children in accordance with current age-specific fertility rates.
Source: United Nations.

Chart 14

Elderly Dependent Ratios in Japan, the United States, and Europe

％
45

40 Japan Germany

35 Italy United States

30

25

20

15

10

5
1990 92 94 96 98 2000 02 04 06 08 10 12 14
Year
Note: The figure refers to the ratio of the elderly dependent population (65 years and over) to the working-age population (15 to 64 years).
Source: United Nations.
 Chart 15
Life Expectancy at Birth in Japan, the United States, and Europe

(1) Female

years
90

88 Japan Germany
Italy United States
86

84

82

80

78

76

74

72

70
1990-94 95-99 2000-04 05-09
Year
(2) Male

years
90

88
Japan Germany
86
Italy United States
84

82

80

78

76

74

72

70
1990-94 95-99 2000-04 05-09
Year
Source: United Nations.
 Chart 16
Projected Working-Age Population Trends in Japan, the United States, and Europe

Year 1990 = 100

140

Japan Germany
130
Italy United States

120

110

100

90

80

70
1990 95 2000 05 10 15 20 25 30
Year

Sources: United Nations; National Institute of Population and Social Security Research; Ministry of Internal Affairs and Communications.

Chart 17
Projected Total Population Trends in Japan, the United States, and Europe

Year 1990 = 100

150

Japan Germany
140
Italy United States

130

120

110

100

90
1990 95 2000 05 10 15 20 25 30
Year

Sources: United Nations; National Institute of Population and Social Security Research; Ministry of Internal Affairs and Communications.
 Chart 18

Real GDP Growth Rate in Japan

y/y % chg.
6

Productivity growth (per-worker real GDP growth)

5
Growth in the number of workers
4 Real GDP growth

2 +0.9%

+0.8% Forecast
1

0
+0.5%
-0.2%
-1 -0.6% -0.8%
-1.2%
-2
1970s 80s 90s 2000s 10s 20s 30s
Note: The growth rate in the number of workers from 2011 onward is calculated using the projected future population (medium variant)
and labor force participation rates (assuming that the labor force participation rates in each age/sex group remain the same as in
2010).
Sources: Cabinet Office; Ministry of Internal Affairs and Communications; National Institute of Population and Social Security Research.

Chart 19

Potential Economic Growth and Firms' Economic Growth Expectations

%
5
Potential GDP growth rate
4
Expected growth rate (corporate)
4

-1
1990 93 96 99 2002 05 08 11

Fiscal year
Note: Expected growth rate (corporate) refers to the outlook for real demand growth rate three years ahead for industry in the
Annual Survey of Corporate Behavior (Cabinet Office).
Sources: Bank of Japan; Cabinet Office.
 Chart 20

Inflation Expectations in Japan

y/y, %
4
Trend inflation (Nishizaki et al. [2012])

3 Trend inflation (Saito et al. [2012])

Consensus forecast (6-10 years)

2

-1

-2

-3
1990 92 94 96 98 2000 02 04 06 08 10
Year

Sources: Nishizaki, Kenji, Toshitaka Sekine, and Yoichi Ueno, "Chronic Deflation in Japan," Bank of Japan Working Paper Series,
No. 12-E-6, 2012; Consensus Economics Inc.
Chart 21

Bank of Japan's Efforts to Cope with Structural Issues

Bank of Japan

First stage Aggressive monetary easing
CME Policy

Asset purchase
Zero interest rate 
policy

Second stage
Accommodative financial conditions

Loan Support Program

Government
Growth‐Supporting Funding 
Facility
Firms Total amount: 5.5 trillion yen

Financial  Stimulating Bank Lending 
institutions Facility
Real economy and general prices Total amount: Unlimited