Mizuho's Momma: BOJ Shift a 'Very Constructive Step'

The Bank of Japan (BOJ) has shifted its monetary policy from a quantity-based approach to an interest rate-based one, aiming for greater flexibility. The market's reaction was mixed, with some seeing it as a constructive step to mitigate the negative effects of a flattened yield curve. Despite this, the BOJ continues to face challenges in achieving its 2% inflation target, as past efforts have not been successful. The BOJ plans to create forward-looking inflation expectations to address this issue, but the effectiveness of this strategy remains uncertain. The BOJ's commitment to its inflation target is strong, but the impact of recent decisions on achieving this goal is still questionable.

What are the potential side effects of the existing flattening of the yield curve mentioned in the text?

What is the significance of the Bank of Japan's commitment to the 2% inflation target?