The government said Monday that the Japanese economy shrank at a 2.3 percent annual rate in the October-to-December quarter, reversing robust gains in the previous three months, as weak overseas demand and a strong yen hurt manufacturing.

Excessive inflation was a cause for concern for Japan during its rapid growth in the 1970s and 1980s, and emerging economies are still careful to prevent prices from rising too quickly. But as the Japanese economy stalled over the last two decades, prices have instead fallen in the reverse phenomenon, called deflation — the damaging downward spiral in prices that saps corporate profits and wages.

Politicians and economists have long criticized the Bank of Japan for not doing enough to combat falling prices. That criticism became louder after the United States Federal Reserve — facing economic pressures of its own — set a 2 percent inflation target last month. Adding to the concern has been the gloom that Europe’s debt crisis continues to cast over the global economy.

At its policy meeting Tuesday, the Bank of Japan’s board showed a more explicit commitment to ending deflation, voting to set consumer inflation at an annual rate of 1 percent as its price goal, at least for the time being. The bank had previously defined 1 percent only as its “understanding” of a desirable rate of inflation.

Prices in Japan have not risen at an annual pace above 1 percent since 1997, when deflation set in.

The central bank on Tuesday also added 10 trillion yen, or $130 billion, to a 65-trillion-yen asset buying and lending program, a measure meant to stimulate the flow of money into the moribund economy. Under the program, the bank buys government and private debt and lends out money, increasing the amount available for economic activity. Buying the government bonds also help sustain Japan’s huge public debt burden.