at least cecchetti and ehrmann find that the fed ’ s revealed inflation aversion is now as high as that of the formal inflation targeting countries. given this strong inflation aversion, ultimately there may be little difference between informal inflation targeting as practiced in the united states and flexible, forward - looking inflation targeting as practiced in many other countries around the world. that said, one could still ask the normative question of whether the united states should go to what i will call a more formal system of inflation targeting. such a system would have pluses and minuses. one potential plus is in credibility and transparency. even if the present - day pragmatic fed responds to exogenous rises in the growth of aggregate supply or drops in the non - inflationary rate of unemployment in a fully accommodative manner, inflation targeting may better communicate the strategy. for example, explicit inflation targeting statements may help to make it clear that the fed is really fighting inflation, not economic growth. but there are also potential disadvantages. economic circumstances have been good in the 1990s, when countries have gone over to inflation targeting, and it is worth repeating that inflation targeting is no panacea. it may not work well in the presence of negative supply shocks like those experienced throughout the world in the 1970s. moreover, there is a potential problem with inflation targeting even in good economic times. if forecasting inflation is difficult, even forward - looking inflation targeting central banks may respond to inflationary shocks too late to ward off inflation. although there are several ways to forecast inflation, none may be that reliable. on one side, many analysts use econometric models, but these may have intrinsic problems in periods of significant structural shifts. the very nature of such shocks is that they are not easy to predict or model. on the other side, one could imagine constructing leading indicators of inflation, but the experience until now is that not many of these are reliable either. one could also rely on market expectations of inflation, survey evidence, or other forecasts of inflation. but if models are not working well and there are not many reliable leading indicators, it is not clear how much information is contained in these other forecasts. without models or leading indicators, even forward - looking inflation targeting strategies may not work as well as advertised. conclusion inflation targeting has many things going for it. this strategy of conducting monetary policy has been widely adopted around the world, and it has seemed to be successful in lowering

haruhiko kuroda : the bank's semiannual report on currency and monetary control statement by mr haruhiko kuroda, governor of the bank of japan, at the committee meeting on financial affairs, house of representatives, 5 april 2022. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank ’ s conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan ’ s economy has picked up as a trend, although some weakness has been seen in part, mainly due to the impact of the novel coronavirus ( covid - 19 ). overseas economies have recovered on the whole, albeit with variation across countries and regions. however, in the wake of russia ’ s invasion of ukraine, global financial and capital markets have been volatile and prices of commodities such as crude oil have risen significantly. in this situation, japan ’ s exports and production have continued to increase as a trend, despite the remaining effects of supply - side constraints. although the march 2022 tankan ( short - term economic survey of enterprises in japan ) shows that business sentiment has deteriorated slightly, corporate profits have continued to improve on the whole and business fixed investment has picked up. on the other hand, a pickup in private consumption has paused due to increased downward pressure stemming from the spread of the omicron variant since the beginning of the year. with regard to the outlook, japan ’ s economy, although expected to be affected by a rise in commodity prices, is likely to recover, with downward pressure stemming from covid - 19 and the effects of supply - side constraints waning and with support from fiscal and monetary policies. the year - on - year rate of change in the consumer price index ( cpi ) has been at around 0. 5 percent recently. it is likely to increase clearly in positive territory for the time being due to a significant rise in energy prices, a pass - through of raw material cost increases, and dissipation of the effects of a reduction in mobile phone charges. meanwhile, the underlying inflationary pressure is projected to increase, mainly on the back of improvement in the output gap and a rise in medium - to long - term inflation expectations. concerning risks to the outlook, the course of covid - 19, including variants, and