Two years after introducing "unprecedented" qualitative and quantitative easing under Gov. Haruhiko Kuroda, the Bank of Japan maintained its monetary policy and assessment of the economy in its latest policy board meeting this week. Attention continues to focus on the target of an annual 2 percent inflation rate in two years — set out by Kuroda and the Abe administration in their fight against deflation but now widely deemed unlikely, and speculation lingers that the central bank might introduce another additional easing to achieve that. But is it really a valid target to pursue in the face of all the costs and problems associated with the policy?

The BOJ policy under Kuroda is credited with sharply pushing down the yen's exchange rate, which stood around ¥80 to the dollar in mid-2012 and now hovers around ¥120. The yen's fall led to record earnings at many of Japan's global firms, and the robust corporate profits have pushed up share prices, with the Nikkei average on the Tokyo Stock Exchange briefly topping 20,000 on Friday for the first time in 15 years. For two years in a row, profitable firms offered their employees decent wage increases not seen for years.

There are questions, however, as to whether the BOJ's operation, which centers on its massive purchase of government bonds from financial firms, has in fact stimulated the nation's economic activities as much. The monetary base, or the combined balance of currency in circulation and commercial financial institutions' current account deposits at the BOJ, hit a record ¥295.86 trillion at the end of March — up 34 percent from a year earlier and more than meeting the central bank's goal of doubling the amount in two years. But the outstanding amount of the financial firms' deposits in the central bank accounts also surged 56 percent from a year earlier to hit ¥201.56 trillion. A large part of the money injected into the system kept accumulating in the banks' accounts at the BOJ without resulting in sharp increase in lending to businesses.