In the economy, in which the price stability target of 2 percent is achieved by pursuing this mechanism, the rational behavior of firms and households should not be to hoard cash and deposits, but to invest and consume. In a situation in which prices rise moderately, the real return on cash hoardings is negative.
If firms accumulate retained earnings gained by cost reductions and hold them simply in cash and deposits, the value of those firms is impaired. It is imperative for firms to undertake strategic initiatives such as improving their production system, carrying out research and development, or securing and developing human resources.