About two years ago, I described the step-by-step approach to attain ultimate price stability as a "dynamic price stability target policy" for extricating Japan from deflation, in contrast to the "timeless perspective" price level target policy.
I identified the three phases of the dynamic adjustment process moving out from the deflationary equilibrium to the normal equilibrium, thereby avoiding the over- and undershooting of the inflation rate and the longterm interest rate, notably during the transition period. Recently, former Federal Reserve Governor Laurence Meyer (2005) has presented a threestep strategy for the future of Japan's monetary policy.