In order to make a breakthrough in this situation, the Bank introduced QQE in April 2013. This policy measure aimed at lowering the real interest rate by two means (Chart 8). The first is to raise inflation expectations through the Bank’s strong commitment to achieving the price stability target of 2 percent at the earliest possible time.
As we can all sense from the anxious urgency of today’s headlines, we will need all that strength and agility as we once again gird for battle against an old adversary of central banks – INFLATION. As you are aware, its underpinnings are complex and the dimensions global. This is not the occasion to discuss this looming challenge in depth, however.