We have to convince people that a situation in which prices will increase by around 2 percent every year is nothing special, and change the economy to one in which people make decisions and behave based on that assumption. In other words, it is necessary to raise people’s expected rates of inflation to 2 percent and re-anchor them at that level.
The Bank had repeatedly implemented various leading-edge policies. While a series of such policies stimulated economic activity, they fell short of showing a strong and clear commitment to achieve the price stability target by any means. As a result, these were insufficient to work on inflation expectations and failed to raise them.