If I may add a few words on the recent joint statement between the Japanese government and the Bank of Japan regarding the strengthening of policy coordination, there is a clear recognition of the role that each entity will play: the Bank will pursue aggressive monetary easing and the government will formulate and promote measures for strengthening competitiveness and the growth potential of Japan’s economy.
It also states that the government and the Bank will work together to overcome deflation early and achieve sustainable economic growth with price stability. This is very significant. The importance of flexibility in monetary policy The decision on the “price stability target” by the Bank was both a decision on a “target” and a flexible inflation targeting framework.