After a pause in growth triggered by the bursting of the mini-bubble in the digital electronics sector in spring 2004, Japan has resumed growth exceeding the potential growth rate, with the rate of change in the consumer price index, excluding institutional and special factors such as oil, telephone charges, rice and fresh food, registering virtually zero in recent months.1 Currently we have good prospects to exit from a decade-long period of deflation.
In this context, I would like to draw some lessons from previous policy developments for the future conduct of monetary policy, focusing on the role of the price stability anchor. The quantitative easing policy and the price stability anchor Japan is apparently viewed as a country that has not adopted an inflation targeting policy.