Once the Federal Reserve regained its policy independence, its goals centered on the price stability and employment objectives laid out in the Employment Act of 1946.
We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies, consistent with price stability and long-term fiscal sustainability, until recovery is secured.
Meanwhile, a few members stated that, while the objective of monetary policy was to achieve the stability of pricesof goods and services, careful attention should be paid to the development of stock and land prices.
The Bank also introduced a new framework for monetary policy conduct, including clarification of its thinking on price stability with a view to ensuring the continued transparency of monetary policy.
Inflation targeting is a policy framework adopted in several countries in which a state of price stability, the goal of monetary policy, is expressed in terms of a desirable rate of inflation in numerical values.
When conducting monetary policy, each Policy Board member makes decisions based on their own thinking on price stability that should be pursued by the Bank.
The Fed's monetary policymakers typically take what happens outside their realm as a given, and then make the adjustments needed to pursue their goals of stable prices and maximum employment.
If by any chance the functioning of the financial system is significantly impaired due to a financial crisis, it will be certain to see an adverse impact on price stability through a plunge in economic activity.
Originally, inflation targeting is a policy framework to enhance the transparency regarding the conduct of monetary policy and to strengthen the credibility of the commitment to price stability.
In the mind of the public, the Bank is most strongly associated with its role as the authority in charge of monetary policy, in order to achieve price stability and-- as another of its objectives-- financial system stability, but the Bank in fact carries out a wide range of business operations.
Mr. Mieno was the first governor of a central bank among advanced countries to face the challenge of simultaneously achieving the two missions-- price stability and financial system stability-- that other advanced countries subsequently confronted.
Price Stability and the"Price Stability Target" of 2 Percent 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.
This tells us that achieving price stability is the precondition for the sound development of the national economy and that the sound development of the national economy-- which deeply impacts public welfare-- is the ultimate target of the monetary policy conduct.
First, as accommodative financial environment continued on a global scale up to the middle of the 2000s and price stability and high economic growth were achieved, many'excesses' were generated in the risk-taking activity of various economic entities.
One of these members added that it was important to gain the wider public's understanding that the Bank's monetary policy was not simply meant to raise prices, but was conducted for the purpose of"contributing to the sound development of the national economy" through price stability.
I believe that dissemination of the Bank's outlook for economic activity and prices as well as its stance for the conduct of monetary policy, which I explained earlier, and its thinking on price stability will accordingly have a certain impact on the formation of interest rates in the financial markets.
Until recently, although the medium- to long-term expected rates of inflation had generally been in positive territory as a trend, observed prices had long been experiencing a mild decline. Consequently, price stability was not achieved, placing the economy in an undesirable situation.
If the observed inflation rate hovers around 2 percent on average and firms and households act on the assumption that prices will increase by about 2 percent, this will lead to price stability in the medium to long term.
So far, medium- to long-term inflation expectations have been mostly in positive territory as a trend, while actual prices have long been on a declining trend. Consequently, price stability has not been achieved, and thus the economy has been in an undesirable situation.
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