This should be regarded as best efforts in a situation where the central bank is trying to hammer out further monetary easing effects despite conventional monetary policy instruments having almost been mobilized to their limit. With such a commitment in place, the public’s expectations with respect to when prices will start to rise will be adjusted if the economy further deteriorates.
In such a case, the public will anticipate that monetary easing will surely be protracted, leading to a more flattened yield curve, thereby strengthening monetary easing effects. As such the current commitment can be said to have a sort of automatic adjustment function against changes in economic conditions. 2.