Japan needs inflation, and more than the 0.5% the Bank of Japan has achieved with its quantitative easing program.
In contrast to other parts of the world, the need is not primarily for cyclical reasons, even if the economy is only narrowly dodging recession. Unemployment is roughly at the natural rate, and Japanese gross domestic product growth, as dismal as it is, is averaging only a little below potential growth -- in fact, measured on a per capita basis, it has exceeded that of most other advanced economies since well before the financial crisis. If this state of the real economy can be achieved and sustained, despite being near deflation, it will be enough for stabilization policy.
