Japan had a long period of loosely structured discretion, with no formal targets but a growing focus on price stability, together with gradual financial liberalisation and repeated and varying attempts to escape from the post-bubble stagnation in the 1990s and 2000s, culminating in formal inflation targeting from 2013.
| Years | Targets and attainment | Classification |
| 1974-2005 | no formal targets; exchange rate floating but of central interest to monetary authorities, some intervention; long gradual process of financial liberalisation; monetary policy initially operated through reserve requirements, discount rate and ‘window guidance’ on banks’ lending, but emphasis shifts over time towards interest rates and open market operations; official policy concerns initially include economic growth, external balance and price stability; 1992-7 asset price bubble burst leads to financial crisis with strong long term effects; focus of policy comes to be increasingly on price stability (but without formal target), with OMOs and interest rates as main monetary instruments, plus quantitative easing 2001-6; occasional forex interventions; increased independence of central bank 1998 | loosely structured discretion LSD |
| 2006-12 | new monetary policy framework with definition of price stability as 0-2% on CPI, then 2012 medium to long term goal for price stability of 1%; forward-looking policymaking and some transparency (which rises over the period); implied inflation targets met (but inflation negative 2009-11); further QE from 2010 | loose inflation targeting LIT |
| 2013-23 | formal point inflation target of 2% on CPI from 2013; target initially met (but only due to new consumption tax), then consistently undershot (but inflation positive except for most of 2016 and parts of 2020 and 2021), inflation expectations remain low but positive; quantitative and qualitative monetary easing from 2013, plus yield curve control and negative interest rates from 2016, each of these ended in 2024; forward guidance from 2018; strong fiscal and monetary response to Covid-19 2020-21, more easing in response to Ukraine war disruption 2022-23; forex intervention against yen depreciation 2022; inflation target overshot a little 2022 and 2023, but long-term expectations remain broadly anchored | full inflation targeting FIT |
Selected IMF references: RED 1979 pp27-9; RED 1981 pp36-8; RED 1983 pp27-9; SR 1984 pp11-12; RED 1986 pp41-6; RED 1990 pp33-4, 52-4; RED 1995 pp108-9; SI 1997 pp42-5; SR 1997 p28; SR 1998 pp28-32; EPD 1999 ch. III; EPD 2001 ch. III; SR 2001 pp33-4; SR 2003 pp16-21; SR 2004 pp11-13; SR 2005 p7; SR 2006 pp7-10; SI 2011 chs II, III; SR 2011 pp13-16; SR 2012 pp17-19; SR 2013 pp11-13; SR 2015 pp14-15; SR 2017 pp25-6; SR 2018 pp16-18, 28; SI 2020 pp34-42, 46; SR 2022 pp5-7, 10, 14-18, 28; SR 2023 pp6-7; SR 2024 pp6-8, 32.
Download the complete set of advanced country details.
Monetary Policy Frameworks 