In this respect, is the adoption of a fully fledged “flexible inflation targeting” – a framework from which both the Fed and the ECB have differentiated themselves (perhaps for different reasons) – the right way to go?
As far as the exchange rate is concerned, I will say what I signed at the meeting of the G7 on 14 April, namely that “excess volatility and disorderly movements in exchange rates are undesirable for economic growth.” I will also repeat that I have noted that the Japanese authorities have said they believe the Japanese economy to be on a sustainable path of recovery and that the exchange rates should reflect these economic fundamentals.