“It’s not just about generating inflation …. We will look closely at the entire economy and make a comprehensive assessment.”

Bank of Japan (BOJ) Governor Haruhiko Kuroda emphasized this in a press conference following the Bank’s end-October Monetary Policy Meeting. The statement should be interpreted as the BOJ’s current take on the quantitative and qualitative monetary easing (QQE) program it began two and a half years ago. While a very fair statement, it has significant implications for the “price stability” mandate of the central bank in the economy with the world’s oldest population.

In January 2013, the BOJ introduced inflation targeting, a policy it had previously resisted, aiming for an annual increase in the consumer price index of 2%. In April of that year, Kuroda took office and began an unprecedented experiment in large-scale monetary easing.

How should this policy be assessed today? Although it’s had a major positive impact on financial markets, it is probably fair to say that its effect on the “entire economy” has been rather disappointing. Corporations, helped primarily by the weak yen, have grown their profits and expanded employment, but wages have not increased as expected, despite the government’s desperate appeals – and even intervention.