The Bank of Japan stated that the underlying inflation rate, excluding temporary factors, had reached 2%, signaling an exit from deflation. In line with this, it indicated a policy of raising the policy rate to 2.5%.
The Bank of Japan explicitly stated that it recognized the underlying inflation rate had reached the 2% target. This marks a milestone in the long-running effort to exit deflation and reflects the resilience of prices.
In light of the continuing rise in prices, the Bank of Japan judged the achievement of 2% to be appropriate and indicated that it may review interest rate levels as an option for future monetary policy operations. The article includes related commentary by Koji Fukaya (深谷幸司).
As market attention focuses on the market response to the announcement and the future course of policy, the Bank of Japan is expected to provide additional information on its future policy direction in stages, including its outlook for policy operations in fiscal 2027.