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; repeated and varying attempts to escape from the post-bubble stagnation in the 1990s and 2000s culminated 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 low); further quantitative easing from 2010||loose inflation targeting LIT|
|2013-17||formal price stability target of 2% on CPI from 2013; target initially met (but only due to new consumption tax), then consistently undershot (but inflation > 0 except for most of 2016), inflation expectations remain low but positive; quantitative and qualitative monetary easing from 2013, shift towards yield curve control from 2016; negative interest rates from 2016||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 chIII; EPD 2001 chIII; SR 2001 pp33-4; SR 2003 pp16-21; SR 2004 pp11-13; SR 2005 p7; SR 2006 pp7-10; SI 2011 chsII, 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.
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