The Bank of Japan judged that inflation had reached the 2% target, marking a milestone on the long road toward overcoming deflation. Following the meeting, the policy rate was left unchanged at approximately 1.25%.
In its outlook released after the monetary policy meeting, the Bank of Japan stated that inflation had reached its long-standing 2% target. It considers inflation to be in a situation where it will remain stable at 2% without being driven by temporary factors.
Achievement of the target is viewed as a symbolic result after approximately 14 years of efforts to overcome deflation. The government, however, has not issued a declaration that deflation has been overcome, although prices have continued to rise in recent years.
The Bank of Japan explained that external factors, including surging energy prices, had pushed up current inflation. Going forward, sustainable wage increases and an endogenous economic cycle that can keep inflation stable at around 2% are expected to be the focus.
At the monetary policy meeting, the Bank indicated that it would leave the policy rate unchanged at approximately the current level of 1.25%, and is expected to continue assessing the stability of price trends and the sustainability of growth.