Amidst fall in Japanese Consumers’ Price Index (CPI) the most in recent two years, the worries for Central Bank of Japan (BoJ) has risen in line with the ongoing economic stance. As the BoJ is working extensively, via monetary stimulus, to meet the inflation target of 2 percent, the south heading CPI poses a serious threat to the Japanese economy. Numerically, CPI has fallen by 0.5 percent in the month of March compared to the figure of the same month a year earlier.

Despite the ongoing unprecedented monetary easing, to curb the deflationary pressure in the economy, the price levels in the economy has been expected to decline for few months ahead as well. Though initially, the BoJ had projected to attain the inflation target by the end of 2014, taking into account the current price level regime, the central bank has revised its projection for the sought inflation target making the year 2015 as the target deadline.

As in the earlier months of the year, despite the BoJ has already announced its stimulus program, the market and economists believe that the monetary authority, i.e., the Japanese central bank ought to make further amendments in its stimulus program to tackle the continuously plunging price levels. Further, economists also opine that the BoJ should strictly keep up with the pace of the moving price levels and continuously strengthen and support its objective of taking its price level to a higher level by 200 basis points.

In line with ongoing inflationary monetary policy, with surge in the money supply in the economy, the property prices in the Japanese economy has lately started to peak, also the overall economy is considering to enhance the wage structure to offset the expected rise in price level.

Despite currently observed trough in Japanese currency index and contradictory result concerning the stimulus being injected by BoJ, the lowered currency index has been interestingly boosting Japanese export and supporting the Japanese Balance of Payment position. Only time will tell whether the Japanese authorities would be able to meet the set inflation target!