There were two major developments in the Japanese economy in 2006.

The first was the Bank of Japan's decision to terminate its quantitative easing policy in March and lift the benchmark short-term interest rate to 0.25 percent in July, ending the five-year, four-month reign of the "zero-interest-rate" policy installed in March 2001.

The central bank's move also lifted its official discount rate from 0.1 percent to 0.4 percent.