Since March last year, when the Bank of Japan terminated the quantitative easing policy and reinstated an interest rate regime, we have raised the policy rate at a moderate pace, even though the year-on-year rate of change in the CPI has remained stable at around 0 percent.
A factor behind this conduct of monetary policy is the changes in the relationship between economic activity and prices I have just discussed. With these changes, the pace of growth in Japan's economy needed to raise the inflation rate in a short period of time would have to be quite high.