Ever since its economic funk of the 1990s, American economists have been urging the Bank of Japan to set an explicit target for a higher rate of inflation as a way to boost its depressed economy. The issue then took on new urgency when the United States and the European Union fell into a somewhat Japan-esque funk. The situation here in the United States has been especially frustrating since Federal Reserve Board Chairman Ben Bernanke used to be among those urging the Bank of Japan to act more forcefully, but Bernanke hasn't taken his own advice. Now comes the news that the BOJ is finally going to listen to professor Bernanke and set a 1 percent inflation target. That's an extremely low target, but it's a higher target than the 0 percent inflation they have been targeting and to the best of my knowledge it's the first time a modern central bank has actually raised its inflation target as a stimulative measure. Good for them.
Dean Baker is right that this is huge news and should be treated as such. The neglect of monetary matters in political and media discourse (outside of Paulite cranks) is very bad; this stuff is incredibly important. Hopefully the BOJ's actions will have some impact and hopefully people in Frankfurt and in the Eccles Building will take note.