Thus, the Bank will continue to closely examine economic developments at home and abroad. Recent Developments in and Outlook for Prices Next, let us look at price developments in Japan (Chart 5). The year-on-year rate of change in the consumer price index (CPI) excluding fresh food has been negative.
Indeed, central banks and markets may have moved towards what Jeremy Stein and co-author have called a “gradualist” equilibrium.8 This is a situation in which central banks make gradual changes to policy tools and communication in order not to upset the market. In such an environment, any change to the central bank’s policy inclination will have a major effect on asset prices.