By contrast, in the case of Japan’s bubble, the outstanding performance in terms of both inflation and growth was to a large extent an isolated phenomenon. Headline CPI for Japan remained already at a low level, just below 1 percent on average between 1985 and 1989, whereas that for G-7 excluding Japan and Germany still remained around 5 percent.
The overall picture of inflation performance remained almost unchanged when using the core measures, like excluding food and energy prices. Thus, there was virtually no synchronization in expectations for prolonged low interest rates on a worldwide basis. Second, the increased interconnection between financial institutions made the adjustment in the current crisis more acute and globally synchronized.