Price stability I would first like to discuss the objectives of monetary policy. The new Bank of Japan Law stipulates that the objective of monetary policy is “to contribute to the sound development of the national economy through the pursuit of price stability.” The sound development of the national economy is a common objective of all economic policies.
As the objective of monetary policy is to contribute to the achievement of BIS Review 82/1997  -5-  this ultimate objective through price stability, its direct objective will be to ensure price stability. Price stability, together with the stability of the financial system, is a precondition for money to smoothly perform its intrinsic functions.