The Bank of Japan said that the inflation rate had reached 2%, but the benefits of wage growth have yet to be felt and there is little sense of euphoria. A weaker yen and higher crude oil prices have emerged as side effects of years of monetary easing.
The Bank of Japan disclosed that the inflation rate had reached its 2% target. While the focus going forward will be whether prices can be kept under control at around 2%, it was also recognised that wage growth remains difficult to feel in everyday life.
In response to the rise in prices against a backdrop of higher crude oil prices, a Bank of Japan official explained that reaching the target was not the end goal. The view was expressed that the increase reflected higher import prices rather than overheating demand.
On the policy front, the article looked back at the Bank of Japan's and the Abe administration's efforts to overcome deflation while the long-running large-scale monetary easing programme, known as reflationary policy, continued. The circumstances behind the inflation target and the strengthening of monetary easing were cited as part of this history.
Looking ahead, the lack of visible improvement in real wages remains an issue, as does achieving both stable prices and wage growth. Heightened tensions in the Middle East and the continued weakness of the yen were also cited as risk factors for price stability.