January 22, 2013
Cabinet Office
Ministry of FinanceBank of Japan

Joint Statement of the Government and the Bank of Japanon Overcoming Deflation and Achieving Sustainable Economic Growth

The Government and the Bank of Japan decided to release the attached statement jointly.
They will strengthen their policy coordination in order to overcome deflation and achievesustainable economic growth.

Attachment

Joint Statement of the Government and the Bank of Japanon Overcoming Deflation and Achieving Sustainable Economic Growth1.

In order to overcome deflation early and achieve sustainable economic growth withprice stability, the Government and the Bank of Japan will strengthen their policy
coordination and work together as follows.

2.

The Bank of Japan conducts monetary policy based on the principle that the policy
shall be aimed at achieving price stability, thereby contributing to the sounddevelopment of the national economy, and is responsible for maintaining financial
system stability. The Bank aims to achieve price stability on a sustainable basis,given that there are various factors that affect prices in the short run.
The Bank recognizes that the inflation rate consistent with price stability on asustainable basis will rise as efforts by a wide range of entities toward strengthening
competitiveness and growth potential of Japan's economy make progress. Based on
this recognition, the Bank sets the price stability target at 2 percent in terms of theyear-on-year rate of change in the consumer price index.
Under the price stability target specified above, the Bank will pursue monetary easing
and aim to achieve this target at the earliest possible time. Taking into considerationthat it will take considerable time before the effects of monetary policy permeate theeconomy, the Bank will ascertain whether there is any significant risk to thesustainability of economic growth, including from the accumulation of financial
imbalances.

3.

The Government will, in order to revitalize Japan's economy, not only flexibly manage
macroeconomic policy but also formulate measures for strengthening competitivenessand growth potential of Japan's economy, and promote them strongly under theleadership of the Headquarters for Japan's Economic Revitalization. Those measures
include all possible decisive policy actions for reforming the economic structure, suchas concentrating resources on innovative research and development, strengthening the1

foundation for innovation, carrying out bold regulatory and institutional reforms andbetter utilizing the tax system.
In addition, in strengthening coordination between the Government and the Bank ofJapan, the Government will steadily promote measures aimed at establishing asustainable fiscal structure with a view to ensuring the credibility of fiscalmanagement.
4.

The Council on Economic and Fiscal Policy will regularly review the progress in theconduct of macroeconomic policies including monetary policy, the current condition
and future prospects of prices in the context of the price stability target under thosepolicies, economic and fiscal situation including employment conditions, and progressin economic structural reform.

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