First, there is much room for maneuver even under the strict targeting scheme. For example, the inflation targeting of the BOE is not on the actual rate, but on the expected rate of inflation after two years, which has provided the central bank with much leeway to cope with the various shocks to the economy. In fact, the BOE has decided to raise short-term interest rates twice since September. These decisions were made when the actual inflation rate was declining, on the grounds that the inflation forecast of BOE staff indicated a sharp increase in prices two years ahead. Second, although the BOJ has no numerical targets, the Governor has reiterated that the Bank wants neither inflation nor deflation, and the actual inflation rate as measured by the CPI has been very stable for the past decade.
Some economists compare the current Japanese economy with that of the U.S. in the Great Depression.
However, as far as the core rate of inflation is concerned, we have not experienced such a dramatic decline as in the U.S. in the 1930s. Next, as already mentioned, the ECB has a different view on transparency, and has refused to publish the minutes of the Governing Council, particularly the voting results. This point has been discussed on many occasions, and I have not much to add. In general, I fully share the concern of the ECB about the possible politicization of monetary policy if results are published. However, I am also tempted to mention that this discussion of publication would allude to a fundamental paradox rooted in the Monetary Union, i.e., the paradox of the single monetary policy supported by the central banks whose original purpose is to serve the national interests of the sovereign states.