Five years after Governor Kuroda embarked on aggressive policy easing, core inflation in Japan is still barely positive and the Bank of Japan seems to have run out of ideas on how to push it higher. There is an argument that the Bank should acknowledge that 2% inflation is unattainable and adopt a lower policy target. But that would be tantamount to an admission of failure and is unlikely. Some have suggested raising the target instead, to demonstrate policy commitment, but Mr Kuroda has quite rightly argued against this idea. Most likely, the 2% target will be retained – and inflation will undershoot it – for the foreseeable future.
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