Thereafter, it will likely not be too long before the rate reaches the “price-stability goal in the medium to long term” of 1 percent for the time being, as specified in the statement released by the Bank of Japan (hereafter, Bank) in February 2012.
Poorly anchored inflation expectations make long-term financial planning more complex with potential adverse effects on investment and growth. Moreover, high inflation is the most regressive form of taxation, particularly on the poor. It is, therefore, important to contain inflation and keep inflation expectations anchored so that consumers do not mark up their long-run inflation expectations by reacting to a short period of higher-than-expected inflation.