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Japan's budding inflation expectations put BOJ in policy bind

Household relief measures complicate efforts to change how consumers think

Japanese are witnessing the fastest pace of consumer price growth in decades. (Photo by Makoto Okada)

TOKYO -- After a decade of battling deflation, the Bank of Japan is on the brink of achieving its target of stable 2% inflation. But its task is being complicated by the government's efforts to ease the strain on households.

The key is inflation expectations -- what people expect inflation to be in the future. If more people expect prices to rise, then prices are more likely to actually rise.

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