Timeline of Economic Policies in Japan

Chapter 2 provides an overview of the circumstances of measures by the Bank of Japan against deflation. Triggered by the bursting of the asset bubble that peaked in 1990, Japan’s deflation occurred in 1997 and 1998. The Bank of Japan was forced to take unprecedented deflationary measures. The zero-interest rate policy and the quantitative easing (QE) policy were called unconventional monetary policy. The japanese economy, which seemed to have recovered through deflationary measures accompanied with time-duration effect, fell back into deflation due to the global financial crisis in September 2008. Quantitative and qualitative easing monetary policy (QQE) in April 2013 was a measure to achieve the 2 percent inflation target by judging that deflation is a monetary phenomenon. The 2 percent CPI estimate, however, started to falter since the consumption tax hike from 5 to 8 percent in April 2014. QQE with a negative Interest Rate in January 2016 and QQE with Yield Curve Control in September 2016 were announced, but these measures did not achieve the inflation target. On the other hand, the consumption tax rate was raised again from 8 to 10 percent in October 2019.