This highlights a fundamental policy problem in Japan – tensions between the rest of government, principally the Ministry of Finance, and the independent central bank. The result is a noncooperative solution that may preclude important opportunities for improved policy. Second, a policy of aggressive monetization might have its principal stimulative effects through depreciation of the yen.
First, by successfully safeguarding price stability for years. A track record like that also protects their independence. As Harold James once put it, confidence is the hard-won “core working capital of central banks” which it would be very costly to jeopardise.