The Bank of Japan is caught in a bind, nearly two years into its stimulus experiment, as it further qualifies its inflation goals in response to tumbling oil prices, a move that could prove self-defeating by tempering price expectations.
In April 2013, the BOJ pledged to achieve its 2 percent inflation target in “about two years” under Governor Haruhiko Kuroda’s monetary easing policy, a campaign to print money at an unprecedented scale in Japan.
The bold, simple pronouncement with a clear time-frame drove down the yen and boosted stocks, reinforcing the initial impact of the easing program, which is aimed at lifting Japan clear from two decades of crippling deflation.
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