The Bank of Japan faces a new challenge in stabilizing inflation near its 2% target, and Governor Ueda emphasized the importance of keeping core inflation around this level.
The article says the Bank of Japan has shifted from its longstanding efforts to achieve 2% inflation to a policy of maintaining inflation at that level without allowing it to rise above it. As core inflation approaches the target, the view is that stability should be pursued while assessing price and wage trends.
Financial conditions remained favorable after the September rate hike, and further rate hikes are expected to be decided based on economic and price developments. The Bank of Japan retains room to adjust its degree of support, and the article reports that future policy management will require caution.
In the latest Tankan survey, companies' inflation expectations were 2.6% for the next 3 years and 2.5% for the next 5 years. Although these exceed the Bank of Japan's 2% target, expectations have not risen sharply over the past 3 months and are not viewed as price pressure requiring an immediate response.
External factors, including turmoil in the Middle East and yen depreciation, could affect core inflation, and the article explains that future policy responses may depend on the yen's movements.