Government / BOJ Joint Statement Sets 2% Inflation Target

The Japanese government and the Bank of Japan issued a joint statement to set an inflation target of 2%  today. The central bank also decided to resort to a new method of open-ended monetary easing to pump more money into the economy. The move was largely expected after Prime Minister Shinzo Abe took office last month, but it still denotes a very significant change in the historical relationship between the Government and the BOJ.

The joint statement issued today is binding for both the government and the BOJ. While the BOJ has agreed to try to hit the 2% inflation target as quickly as possible, rather than over the medium to long term, the government has also promised to introduce measures to raise the international competitiveness of Japanese industry and to encourage investment by means of deregulation.