If we can reverse the deflationary mindset and economic entities started behaving based on the premise that prices will rise moderately, the exact opposite would happen; that is, a virtuous cycle would arise in which firms’ sales and profits increase and wages also rise. What the Bank is aiming to achieve is this kind of virtuous cycle.
This will likely benefit a broad range of economic entities. When I provide this explanation, I am sometimes asked: if we try to achieve a rise in prices and prices do rise but wages do not, won’t this be bad for the economy? However, as I mentioned earlier, a rise in prices without a rise in wages is not something that normally happens.