At its monetary policy meeting from the 19th to the 30th, the Bank of Japan will determine whether the underlying inflation rate has reached 2%. If it has, this is expected to signal a shift away from its deflation response and could affect the pace of future rate hikes.
The Bank of Japan has finalized a policy of determining at its monetary policy meeting on the 29th and 30th whether inflation has reached its long-standing target of 2%. If it determines that the target has been reached, this could symbolize the end of its deflation response.
At the previous September meeting, it raised the policy rate to around 1.25%, but rates are widely expected to be left unchanged this time.
Attention is focusing on indicators of price trends, including movements in the national consumer price index excluding core factors, as well as wage trends, and the Outlook Report is expected to include an outlook for when the target will be reached. The Bank of Japan has indicated that it expects the target to be reached from the second half of fiscal 2026 through fiscal 2027.
According to announcements by the Ministry of Internal Affairs and Communications and explanations from the Bank of Japan, price increases may be influenced by underlying factors in addition to temporary factors, and careful assessment is expected to continue.