Fifteen years of deflationary conditions were a disaster for Japan. From the mid-1990s its economy shrank in cash terms, wrecking the public finances. Net government debt ballooned to more than 130 per cent of gross domestic product. Having previously dazzled its rivals during years of fast growth, Japan gradually transformed from economic exemplar to cautionary tale.

When Shinzo Abe, the Japanese prime minister, took office in December 2012 he made clear his intention to break Japan’s deflation. The Bank of Japan, under a new governor, Haruhiko Kuroda, was ordered to pursue a goal of 2 per cent inflation. But after impressive early progress, the economy slowed, partly dragged down by an increase in sales taxes. Voices can now be heard doubting whether Mr Kuroda can succeed in putting the country back on to a path of rising prices

On Friday Mr Kuroda emphatically refuted these doubts by increasing his purchases of government bonds from Y60tn-Y70tn annually to Y80tn. In response, Japanese stocks rose 5 per cent, the yen fell 2 per cent, and even the US stock market hit a record high.