Whether understandable or not, herd behaviour nevertheless adds to an unacceptable degree of volatility in financial markets. In the East Asian case, herd instinct undoubtedly played a part in the over-lending that preceded the crisis. Western banks and fund managers were fearful of being left behind in the rush to participate in the Asian “miracle”.
This has contributed to maintaining the accommodative environment for corporate finance through maintenance of the stability of financial markets. The Bank has made a commitment to maintain the quantitative easing policy until the year-on-year rate of change in the consumer price index (CPI; excluding fresh food, on a nationwide basis) registers zero percent or higher on a sustainable basis.