Dogma designed by bureaucrats for central bankers means they must aim for inflation to measure 2 per cent over the medium term. Once again Japan has failed miserably, June CPI excluding fresh food (the preferred measure in Japan) came in today at a 0.6 per cent increase over the year, in turn, the lowest reading in two years. If one were to also exclude energy the annualised increase would be 0.5 per cent. Since 1990 the 2 per cent target has been met – briefly – 4 times only, and in 2009 it dropped to minus 2 per cent. It just goes to show that they have little idea as to how exactly one targets inflation, and that cutting interest rates is like pushing on a piece of string.
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