Based on this idea, I am of the position that the Bank should show its guidance in a flexible and appropriate manner in response to changes in the outlook for economic and price conditions. I should note that the Bank’s current attempt – namely, aiming to achieve the 2 percent price stability target within about two years to overcome deflation – is unprecedented.
This attempt to push up the inflation rate within a fixed timeframe is completely different from the conventional philosophy of forward guidance, which expects to influence longer-term interest rates by committing to continuing monetary easing as long as necessary and thereby bringing forward future demand.