The bold monetary easing policy, which aims at achieving the price stability target of 2 percent, has led to an improvement in employment, a rise in wages, and an increase in corporate profits, as seen in the rise in stock prices.
Last year, the Bank of Japan implemented a bold monetary-easing policy and took measures to correct the yen's over-appreciation, finally bringing the end of deflation into view.
The Bank of Japan has also finally set a 2% inflation target under the administration of Prime Minister Abe,and has announced plans to implement bold monetary-easing policies that aim at breaking away from deflation.
Looking at economic trends in Japan,the yen underwent some correction from its excessive strength owing to bold monetary easing policies and flexible fiscal policies implemented by the Abe administration, which took office at the end of 2012.
The Japanese government hasbeen pursuing a three-pronged strategy that comprises bold monetary easing, flexible fiscal policy, and a growth strategy that aims to spur private investment. These policies are often referred to as the three arrows of Abenomics.
Looking at the mechanism behind this rise, it appears that, in the first instance, the Bank's strong and clear commitment to overcome deflation through QQE,together with bold monetary easing to underpin this commitment, has affected expectations of economic entities, and inflation expectations started to rise.
Three-Pronged Strategy(Three Arrows) At present, the government is determined to address challenges that Japan's economy faces, including the overcoming of deflation, through the combination of three policy arrows--namely, bold monetary easing, flexible fiscal policy, and a growth strategy that promotes private investment.
The Liberal Democratic Party(LDP) promised that with a change of administration it would promote a set ofmacroeconomic policies comprised of"three arrows"- bold monetary policy, flexible fiscal policy and growth strategy to spur private-sector investment- in a bid to end Japan's prolonged economic slump("lost 20 years") and deflation.
これが、「量的・質的金融緩和」と呼ばれる大胆な金融緩和です。
This is the boldmonetary easing policy called"quantitative and qualitative monetary easing" hereafter QQE.
The Governor and the two Deputy Governors of the Bank had conducted bold monetary easing over the past five years toward achieving the price stability target.
The Bank of Japan(BOJ) has set a price stability target of 2% andis currently carrying out bold monetary easing. The BOJ is entrusted with setting the specific indicators concerned.
To underpin the strong and clear commitment,the Bank has decided to enter a new phase of bold monetary easing both in terms of quantity and quality Chart 11.
As I will describe later, to overcome deflation, the Bank of Japan introducedlast April quantitative and qualitative monetary easing, dubbed QQE-- an unprecedented boldmonetary easing-- and has been pursuing this policy.
If the Bank had aimed at a price stability target of 2 percent at an earlier stage,it could have pursued more timely and bolder monetary easing in response to a decline in the inflation rate, thereby enabling the economy to overcome deflation at an early stage.
Comparison with Overseas Central Banks In relation to monetary easing by overseas central banks,we sometimes receive an opinion that"the Bank should pursue bolder monetary easing, like the Federal Reserve, by purchasing assets without setting a ceiling and a time limit or clarifying the duration for the zero interest rate.
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