Looking at empirical analysis, inflation rates have responded to higher growth rates with a 1-2 year time-lag and the reverse relationship has not been observed. Second, inflation targeting is essentially a framework for enhancing the transparency of the conduct of monetary policy. But arguments in Japan are problematic since they regard inflation targeting as a measure to overcome deflation.
Sluggish growth in the economies of our trading partners and the relatively high dollar have held down net exports, blunting another potential channel for monetary policy easing to bolster spending.