And third, the Bank clarified its posture that it will strengthen policy coordination with the Government and work together. Introduction of “Price Stability Target” To begin with, let me talk about the Bank’s decision to set 2 percent in terms of the year-on-year rate of change in the CPI as the “price stability target.” Japan’s economy has been in deflation for a long period.
Seen in context, the recent developments in loans to firms appear to be broadly in line with past regularities in bank lending behaviour, particularly at turning-points in the business cycle. Indeed, loans to firms tend to lag GDP growth by about three quarters.