The Bank of Japan judged that underlying inflation was broadly consistent with 2% and announced that the 2% target had been reached. Following the joint statement by the government and the Bank of Japan, policy is now entering a phase focused on establishing 2% inflation while curbing further price increases.
The Bank of Japan judged that the underlying trend in consumer prices was broadly consistent with 2% and, based on the joint statement by the Bank and the government, announced that the 2% target had been reached. This marked attainment after more than 13 years and reflects the stakeholders' shared understanding of the price stability target.
However, actual inflation has remained above 2% for four years because of factors including surging energy prices, and households continue to feel the burden. Monetary policy is expected to shift toward establishing 2% inflation while curbing further price increases.
As a future policy direction, a view was expressed that the Bank of Japan should move away from promoting monetary easing aimed at overcoming deflation and pursue rate hikes toward a neutral interest rate that neither stimulates nor restrains the economy.
In political circles, the Takaichi administration's plan to promote more than ¥370 trillion in public- and private-sector investment and cut consumption taxes on food as a measure against high prices was discussed. However, concerns have also emerged that inflationary pressure could return if fiscal expansion and monetary easing are combined again.