The most important point of the Bank of Japan's aggressive easing policy is to dispel the deflationary expectations that have been firmly embedded over the past 15 years, deputy governor Kikuo Iwata said yesterday during a speech in Tokyo.

"When the central bank commits itself to achieving the inflation target… people's expectations change from deflationary to inflationary," Iwata argued, adding this is a "major key to achieving policy effects."

Describing the policy's transmission mechanism, he