In other words, the resiliency of monetary policy – more precisely, conventional or standard monetary policy – is considerably eroded. Soon after I took office in March 2013, the Bank of Japan introduced Quantitative and Qualitative Monetary Easing (QQE) to overcome mild but protracted deflation. QQE has two key elements that enable the Bank to move beyond the previous monetary policy measures.
The first is the Bank’s strong and clear commitment to achieving the price stability target of 2 percent at the earliest possible time, which is underpinned by a large-scale monetary easing, thereby drastically converting the deflationary mindset among people and raising inflation expectations.