Looking back at cases both in Japan and abroad where central banks were accused of making monetary policy mistakes, such mistakes arose when the central bank failed to properly understand major changes in the environment and their significance.
The only problem was, it did not work quite as the theory predicted. We worked hard at the Bank to try to save the idea of monetary targets, but the economy was changing rapidly, and new types of bank deposits were being introduced. As a result, the relationship between money supply and inflation proved too unpredictable to rely on.