More recently, a higher inflation target debate played out in Japan in a more high profile fashion. In deference to the electoral commitment of the incoming government to provide a growth stimulus, the Bank of Japan raised its goal of 1% inflation to a target of 2% inflation which it hopes to achieve through unlimited bond purchase. 27.
At the same time, it allows an appropriate medium-term orientation of fiscal policy which fosters confidence and thereby growth. In order to fully reap the benefits of this framework, it is important that countries respect its objectives and implement appropriate consolidation plans where needed.