However, to raise inflation expectations to 2 percent, it is necessary to have strong enough levels of speed and momentum to change people’s expectations. Deflationary equilibrium is a steady state, so there is gravity that pulls prices to the equilibrium. This is why deflation has been protracted for 15 years in Japan despite the cyclical economic fluctuations and monetary and fiscal stimulus measures.
Looking back at the original Central Bank Act of 1942, it outlines “In what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole.” Indeed this Act echoes Article 45 of the Constitution.4 This is also re ected in our mission statement today, we serve the “public interest by safeguarding monetary and nancial stability and by working to ensure that the nancial system operates in the best interests of consumers and the wider economy.”  We are also well placed to conduct research into issues that will have long term implications for the economy.