Tokyo, Oct. 23 (Jiji Press)–The Bank of Japan is highly likely to conclude at its next policymaking meeting from Thursday that the rate of the country’s underlying inflation, excluding temporary factors, has reached the BOJ’s 2 pct target. The BOJ set the target in January 2013 and has made efforts to attain it with massive monetary easing. The central bank will aim to stabilize the inflation rate at 2 pct once the target is met. At the two-day meeting of its Policy Board, the BOJ is expected to keep its policy interest rate unchanged. BOJ Governor Kazuo Ueda has said that the underlying inflation rate is getting very close to 2 pct. Behind his view are active corporate efforts to reflect higher materials and personnel costs in their product and service prices as well as growing demand related to artificial intelligence. The BOJ has estimated that the 2 pct target would be met in the second half of fiscal 2026 or in fiscal 2027. There are risks of the underlying inflation rate exceeding 2 pct due to higher crude oil prices amid the Middle East turmoil, the yen’s weakness and surging AI-related demand. At a news conference held Oct. 16 after a gathering of finance ministers and central bank chiefs from the Group of 20 advanced and emerging economies in Bangkok, Ueda said that the BOJ cannot tolerate underlying inflation rising further above 2 pct. The BOJ is expected to leave its monetary policy unchanged at next week’s meeting. Still, the central bank may hike the policy interest rate at its policymaking meeting in December, after it raised the rate by 0.25 percentage point to around 1.25 pct in September. In its quarterly Outlook for Economic Activity and Prices report to be adopted at next week’s meeting, the BOJ is seen keeping its growth estimates for the country’s prices and inflation-adjusted real gross domestic product largely unchanged. However, the bank may raise its projection for consumer price index growth for fiscal 2027 slightly from the 2.4 pct estimated in July, as crude oil prices remain high, sources said. END [Copyright The Jiji Press, Ltd.]
