The Bank of Japan under its new governor, Mr. Haruhiko Kuroda, came up with a bold monetary easing policy Thursday, aimed at achieving a 2 percent inflation target in two years. The BOJ will double the monetary base — the amount of cash circulating in the market and commercial banks' reserves at the BOJ — in two years, start buying government bonds of all maturities including 40-year bonds, and extend the average remaining maturity of government bonds in its possession from less than three years to about seven years.

Gov. Kuroda's declaration that the central bank will "enter a new phase of monetary easing in terms of quantity and quality" shows his strong determination to pull the Japanese economy out of its long-term deflation.

While it is hoped that the BOJ's new policy will lead to increased personal consumption and capital investment, the bold monetary easing carries the risk of causing asset bubbles. The ultimate goal should be rises in workers' wages and expansion of employment — not rises of prices, per se. The central bank should prevent, at any cost, a situation in which inflation occurs without improvements in wages and employment.