Before responding to the questions, we first need to review the significance of price stability. In this regard, the Bank of Japan has recently announced that it will conduct a comprehensive study on price stability, and today’s speech can be regarded as a prelude to such study. 1. Why is price stability important?
Significance of price stability The new Bank of Japan Law which came into effect in April 1998 stipulates that the objective of monetary policy is to “contribute to the sound development of the national economy through the pursuit of price stability”.