A Post-Reflation Monetary Framework for Japan, Issues 2005-2073
International Monetary Fund, Apr 1, 2005 - Business & Economics - 28 pages
Modifications to Japan's monetary policy framework will be needed as positive inflation resumes because the current monetary regime and operations are tailored to ending deflation. The paper suggests that the monetary regime should move from an "anti-deflation" objective to an inflation objective, complemented by a shift of monetary operations from a quantitative operating target to an interest rate target. There are also questions about the timing of these shifts and the particulars of such arrangements, but decisive answers are elusive.
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adopted announcement anti-deflation Bank of Japan bank reserves CABs changes commitment to maintain commitment to price commitment versus flexibility conditions for ending core inflation credibility current account balances deflation ends disinflation ending deflation ending quantitative easing excess liquidity excess reserves FFIT countries financial systems flexible than FFIT flexible than IPSA foreign exchange market formal accountability Full-fledged inflation targeting implementation Implicit Price Stability inflation expectations inflation forecast inflation reports inflation target parameters Inflation Targeting Countries interbank IPSA and AFFIT IPSA countries market expectations market rates Median monetary conditions monetary framework Monetary Operations Arrangements monetary policy framework monetary regime monetary transmission money market move necessary conditions nominal anchor percent policy horizon policy signal positive inflation Post-Reflation Monetary post-reflation regime potential proposed adjustments repos reserve requirements resumption of inflation risk Roger and Stone short-term interest rates Stone and Bhundia target range tightening of monetary tradeoffs transparency and accountability United Kingdom volatility zero