Tokyo, Oct. 30 (Jiji Press)–The Bank of Japan said Friday that the country’s underlying inflation has reached its 2 pct target, marking a new phase in its monetary policy nearly 14 years after it first set the inflation goal and launched large-scale monetary easing. The central bank expressed its assessment of inflation excluding temporary factors in its quarterly Outlook for Economic Activity and Prices report adopted at a two-day policy meeting that ended the same day. The BOJ is set to shift its focus to curbing inflationary pressures to stabilize the inflation rate at around 2 pct. At the Policy Board meeting, the BOJ decided to maintain its policy of guiding the unsecured overnight call rate, Japan’s benchmark short-term interbank rate, to around 1.25 pct. Having raised the policy rate to the current level at its previous policy meeting in September, the bank opted to stay put this time to assess the effects of the hike on the economy, prices and corporate loans for now. BOJ Governor Kazuo Ueda will explain the policy decision at a news conference later on Friday. The BOJ believes that financial conditions in Japan remain accommodative after the latest rate hike. It plans to continue raising interest rates, as upside risks to inflation are growing due to persistently high crude oil prices amid tensions in the Middle East, rising global demand related to artificial intelligence and higher import costs stemming from the yen’s weakness. Japan’s central bank launched its massive monetary easing campaign in January 2013 as part of the Abenomics policy mix championed by then Prime Minister Shinzo Abe. At the time, the bank set a goal of achieving 2 pct inflation in around two years. However, deep-rooted deflationary pressures repeatedly forced the BOJ to push back the target date. After ending its negative interest rate policy in March 2024, the BOJ has continued to raise interest rates and estimated that underlying inflation would reach 2 pct in the second half of fiscal 2026 or in fiscal 2027. END [Copyright The Jiji Press, Ltd.]
