However, the size of the working-age population (aged 15 to 64 years old) is projected to decline after 2012. The simple fact is that both Japan and Europe are facing a common structural issue – population ageing. Japan is taking the lead with demographic and associated macroeconomic issues.
In the current context, coming out of such a severe hit to jobs and economic activity, the Bank must keep its eye on the ball. Fortunately, there are many other policies that are well suited to deal with sector-specific issues. All of this together highlights the challenges of policy coordination and the importance of central bank independence.