An editorial argues that, with the Bank of Japan's inflation rate said to have reached 2%, policy operations, including rate hikes, should proceed cautiously under a policy of stabilising inflation at around 2% going forward.
As a milestone for the Bank of Japan's monetary policy, it has been noted that the inflation rate has reached the 2% target. Following the long road to this point, the policy aimed at overcoming deflation is increasingly being viewed favourably, while recognition is shifting toward a phase of stabilising inflation.
The Bank of Japan places emphasis on underlying inflation and is described as independently estimating indicators less affected by fluctuations in fresh food prices and the effects of the government's measures to address inflation. It is also noted that the recent inflation driven substantially by external factors may mean that reaching the target is merely a temporary waypoint.
At a press conference, Governor Kazuo Ueda (植田和男) said it would be important to stabilise inflation at around 2% going forward. Rate hikes at an appropriate time are considered necessary while containing inflationary pressure. At the same time, it has been pointed out that rate hikes could curb investment appetite by worsening cash flow.
The Regional Economic Report indicated moves by transport operators to reduce the scale of investment as a result of worsening cash flow, highlighting the difficulty of managing policy with both prices and economic conditions in view. It was also argued that examination of the government's role and the challenges ahead should continue in light of the intent of the joint statement.