(mindestens) For us, this means accompanying the greening of the ﬁnancial system, and it involves various areas of central bank activities. We need to better understand the economic implications of climate change and factor these into our monetary policy analyses. For example, the growing frequency of extreme weather events could make inﬂation and growth rates more volatile or curb potential growth.
You will have heard of the term creative destruction. When deflation continues, destruction will not be followed by creation. If structural reforms under the growth strategy make progress, these reforms are basically supply-side measures that increase the aggregate supply capacity of Japan’s economy. Such increases in supply capacity could result in generating deflationary pressure unless they are accompanied by corresponding increases in aggregate demand.