At its monetary policy meeting, the Bank of Japan judged that underlying inflation had reached the 2% price stability target and announced that the target had been reached more than 13 years after its introduction. It decided to keep the policy rate at around 1.25%.
The Bank of Japan held a monetary policy meeting and judged that underlying inflation had reached the 2% level. As the Bank now regards this indicator as consistent with its price stability target, the decision marks a milestone in its long-running easing policy. The target was introduced in January 2013, making this a realization more than 13 years later.
The Outlook Report said that underlying inflation had reached a level that was broadly consistent with the target. Wording used after the previous meeting was deleted, and the assessment was presented as a basis for future policy decisions.
The meeting decided by a majority vote to keep the policy rate unchanged. The Bank indicated that it would continue to monitor the effects of monetary easing while assessing the impact of the rate hike in September. The Outlook Report also expressed concern about the accommodative nature of financial conditions.
Going forward, the policy focus is expected to shift toward stabilizing underlying inflation at around 2% through further rate hikes, and the market is closely watching comments on the pace of future increases. Other major central banks have likewise decided to keep their monetary policy unchanged.