"Mission incomplete" aptly describes the lack of progress made by the Bank of Japan in reflating Japan's moribund economy. In April 2013, under its new governor Haruhiko Kuroda, the BOJ launched its unprecedented quantitative and qualitative monetary easing (QQE) policy to overcome chronic mild deflation. He was confident that the 2 percent price stability target would be achieved in two years.
Four years later, underlying inflation remains around zero percent and is lower than that in the euro area (about 1 percent). Thus, the BOJ lags behind the European Central Bank (ECB), which conducts similar unconventional monetary easing. Japan's inflation is projected to rise in 2017 mainly due to weakened impact of an oil price drop. But it is widely expected that the BOJ will not achieve 2 percent inflation anytime soon in contrast to the BOJ' current projected timing (around fiscal year 2018).
The QQE policy targeted the monetary base through massive purchases of Japanese government bonds (JGBs), exchange-traded funds and Japanese real estate investment trusts. With the annual pace of JGB purchases of around ¥80 trillion ($700 billion), the BOJ's total assets swelled to about 90 percent of gross domestic product. The BOJ added a negative interest rate in January 2016 and yield curve control last September.