In practice this meant either that the foreign currency public debt would have to increase by the amount the authorities were willing to intervene in the foreign exchange markets, or fiscal policy would have to adjust to find the resources for foreign currency purchases out of current spending or from increased revenue.
After a pause in growth triggered by the bursting of the mini-bubble in the digital electronics sector in spring 2004, Japan has resumed growth exceeding the potential growth rate, with the rate of change in the consumer price index, excluding institutional and special factors such as oil, telephone charges, rice and fresh food, registering virtually zero in recent months.1 Currently we have good prospects to exit from a decade-long period of deflation.