It is, however, extremely difficult to achieve these two requirements simultaneously. Let me explain how the two requirements conflict. In order to make timely policy responses, it will be necessary for the central bank to act based on its projections of the economic and price situations one or two years ahead.
However, considering the difficulty of accurately predicting economic developments, such action may not necessarily result in market confidence in the Bank’s policy. Nevertheless, it would be impossible to act pre-emptively if the Bank waited until a consensus was reached on future economic developments and desirable policy actions.