In my view, the Bank’s decision of additional monetary easing aims at offering a kind of insurance against such downside risks to prices. To be sure, I consider that the underlying trend in prices is more important than monthly fluctuations in price indicators.
In this regard, the declines in international commodity prices, such as the recent decline in crude oil prices, will surely exert downward pressure on the core CPI. On the other hand, as I mentioned earlier, from a somewhat longer-term perspective it clearly will have positive effects on Japan’s economy by reducing income transfers.