Japanese Prime Minister Abe's aim is to revitalize private sector corporate activity and ensure an exit from deflation through three policy roots.
- The first root is bold monetary policy that aims to direct yen depreciation, enhance inflationary expectations, and improve business sentiment as well as create a stronger expectation for economic growth through a stock market rally.
- The second root is flexible fiscal policy that targets to narrow the deflationary gap by causing additional demand, thus creating an environment in which money supply from the BoJ's monetary policy can circulate smoothly.
- The third root is growth strategy that aims to restore the confidence of companies and encourage them to take action on the new investment opportunities provided by structural reforms. Numerous bills that aim to further the growth strategies have been submitted during the current session of diet, suggesting that the focus on the third arrow is picking up pace.