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In contrast to the previous “understanding,” “goal” implies the BOJ’s intention to hit a target.
Whether it leads to formal inflation targeting will depend on such conditions as the public consensus on a desirable inflation rate, the operational independence of the central bank, and the consensus on the causes and costs of inflation/deflation. Moreover, an emphasis on the substantive actions of the BOJ could undermine the significance of collective decisions at the MPM. As an initial step under the new “goal,” an increase in JGB purchases may be a signal of policy commitment and/or a message to the forex market.