Despite these statements, it was not wholly clear whether the BOJ was ultimately pursing a 2-percent level or a lower one. Against this background, the BOJ adopted the 2 percent target and QQE in 2013 to restore medium- to long-term inflation expectations back to around 2 percent – the level that had been achieved over 20 years earlier.
Since the introduction of QQE, medium- to long-term inflation expectations of economists and the inflation swap rate (implied five-year forward rate, five years ahead) have risen moderately and remain around 1 percent today. Nevertheless, the 2 percent target remains distant (Chart 3).