Accordingly, I would like to take this opportunity to give my thoughts on the subject. The issue of inflation dynamics has been studied for a long time, yet remains as relevant today as ever. The year I joined the Bank of Japan, 1958, was the year when the seminal paper by Professor Alban W. Phillips was published.
Half a century on, the basic idea behind the Phillips curve has been considerably extended, and many related theories have evolved in connection with the role of expectations, the mechanisms that bring about price rigidity, and so forth. For monetary policy to achieve its objective of price stability, it is extremely important to accurately understand the dynamics of inflation.