- Jan. 11, 2017
- Dec. 30, 2016
- Dec. 30, 2016
The Bank of Japan Act states that the Bank's monetary policy should be "aimed at achieving price stability, thereby contributing to the sound development of the national economy."
Price stability is important because it provides the foundation for the nation's economic activity. In a market economy, individuals and firms make decisions on whether to consume or invest, based on the prices of goods and services. When prices fluctuate, individuals and firms find it hard to make appropriate consumption and investment decisions, and this can hinder the efficient allocation of resources in the economy. Unstable prices can also distort income distribution.
On this basis, the Bank set the "price stability target" at 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) in January 2013, and has made a commitment to achieving this target at the earliest possible time.
For details, please see The "Price Stability Target" under the Framework for the Conduct of Monetary Policy [PDF 18KB] (released on January 22, 2013). Also, the Bank released the statement titled "Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth" [PDF 14KB] with the government in January 2013.
At the Monetary Policy Meeting held on September 20 and 21, 2016, the Bank decided to introduce "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control."
The following is the outline of "QQE with Yield Curve Control." For details, refer to New Framework for Strengthening Monetary Easing: "Quantitative and Qualitative Monetary Easing with Yield Curve Control" [PDF44KB] (released on September 21, 2016). In addition, as a background paper, "Comprehensive Assessment of the Monetary Easing (the Background)" [PDF814KB] was released on September 21, 2016.
For details of the analysis conducted in the Comprehensive Assessment: Developments in Economic Activity and Prices as well as Policy Effects since the Introduction of Quantitative and Qualitative Monetary Easing (QQE), please see Supplementary Paper Series for the "Comprehensive Assessment."
The guideline for market operations specifies a short-term policy interest rate and a target level of a long-term interest rate. The Bank decided to set the following guideline for market operations for the intermeeting period. The Bank will cut the interest rates further if judged necessary.
The Bank decided to introduce the following new tools of market operations so as to control the yield curve smoothly.
With regard to asset purchases except for JGB purchases, the Bank decided to set the following guidelines.
The Bank will continue with "QQE with Yield Curve Control," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. The Bank will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds the price stability target of 2 percent and stays above the target in a stable manner. Meanwhile, the pace of increase in the monetary base may fluctuate in the short run under market operations which aim at controlling the yield curve.
The Bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target of 2 percent.
The Bank introduced QQE in April 2013; expanded it in October 2014; introduced supplementary measures in December 2015; introduced QQE with a Negative Interest Rate in January 2016; and enhanced monetary easing in July 2016. For details, see the following.
For more information on the current conduct of the Bank's monetary policy, see Monetary Policy. For speeches and statements by Governor Kuroda, see Speeches by speaker. For speeches and statements by other Policy Board members, see Speeches and Statements.