Japan's economy had been suffering from deflation for more than 15 years, since the late 1990s, with the year-on-year rate of change in the consumer price index (CPI) being about zero or slightly negative. In such circumstances, the Bank of Japan has been conducting monetary policies in various unconventional ways for nearly 20 years (Chart 1).
Looking back, in 1998, now nearly 20 years ago, Japan's policy interest rate -- which at that time was the uncollateralized overnight call rate -- already had been lowered to close to zero, at 0.25 percent. Given that economic activity and prices did not improve even in this situation, the Bank introduced a zero interest rate policy in February 1999.