Japan's Central Bank Takes A Huge Step To End Deflation

The Japanese central bank has decided to outdo the US Fed in its use of monetary policy to achieve price stability.  Ordinarily, price stability for central banks involves the use of monetary policy to reduce inflation.  Japan has had the opposite problem.  It has been in a deflationary spiral for many years.  The central bank is going to purchase a larger quantity, and a wider variety of financial assets, in order reach a target inflation rate of 2%.  The increase in the money supply may increase output, and it will cut the real cost of Japanese debt.  We are about to witness a grand macroeconomic experiment.  Japan has the third largest economy in the world.  It will be interesting to see how effective monetary policy can be in an economy with deflationary expectations.