The danger of committing to an inflation target and difficulty of managing expec...
TOKYO - The danger of committing to an inflation target and difficulty of managing expectations were debated in earnest at the Bank of Japan a decade ago, showed transcripts released on Wednesday, as U.S. and European central bankers grapple with similar topics.
The BOJ set an inflation target of 2% in the first year of Governor Haruhiko Kuroda’s tenure in 2013, as pressure increased on the central bank to take more radical measures under the “Abenomics” initiative of then-new prime minister Shinzo Abe. Transcripts of the BOJ’s December 2009 policy meeting showed then Governor Masaaki Shirakawa voicing concern that focusing too narrowly on price moves alone could divert attention away from much-needed reforms to boost Japan’s potential growth, such as measures to raise productivity and increase the birth rate.
BOJ policymakers also worried that the public blamed all of Japan’s economic woes on falling prices. Some said the fact the term “deflation” was so widely used could in itself hurt inflation expectations, the transcripts showed.
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