Abstract

The Bank of Japan Law states that “The Bank of Japan has for its object the regulation of the currency, the control and facilitation of credit and finance, … in order that the general economic activities of the nation might adequately be enhanced.” The primary objectives of monetary policy pursued by the Bank of Japan in accordance with this law have evolved considerably since the early 1970s. Prior to that time, monetary policy was primarily directed at supporting the rapid growth in output and productivity and maintaining the yen at a fixed exchange rate, consistent with an acceptable rate of inflation and a manageable balance of payments position. With the move to floating exchange rates and the inflationary consequences of the first oil price shock in the early 1970s, the Bank has accorded high priority to price and exchange rate stability, although the maintenance of economic growth and low unemployment have remained important objectives.32

instruments and Operations Procedures: Occa Paper No.70
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