At present, in the guideline for market operations, the Bank sets the short-term policy interest rate at minus 0.1 percent and the target level of the 10-year JGB yields at around 0 percent, conducting JGB purchases so as to achieve this target level. The second component is an inflation-overshooting commitment.
This dilemma is exacerbated by the fact that no country can act in isolation, as the present and potential effects on trade flows obviously need to be taken into consideration. Indeed, this is a classic case in which collective action, if feasible, would be welfareimproving.