For Japan’s economy to get out of the vicious cycle and recover sustainably, it is critical first to overcome deflation, thereby turning the behavior of economic entities, such as firms and households, positive. In that regard, the biggest challenge Japan’s economy is faced with is to overcome deflation promptly. The Bank of Japan recognizes that its role is critical.
With such recognition, the Bank introduced quantitative and qualitative monetary easing at the Monetary Policy Meeting held at the beginning of April. It aims to achieve the price stability target of 2 percent in terms of the year-on-year rate of change in consumer price index at the earliest possible time, with a time horizon of about two years.