The likelihood of the Bank of Japan's 2% price target being reached is said to be increasing, and the possibility is being discussed that monetary policy will enter a new phase based on the sustainability of price increases.
Reports indicate that the Bank of Japan is increasingly likely to judge that it has effectively reached its target of 2% underlying inflation. The policy that had prioritized overcoming deflation is expected to move into a new phase focused on restraining an upside overshoot in prices.
Bank of Japan Policy Board member Hajime Takata (高田創) submitted a proposal at the Monetary Policy Meeting on 31 July 2026 to include the following sentence in the Outlook for Economic Activity and Prices: "Consumer prices are considered to have already reached approximately the level at which the price stability target is achieved." Another Policy Board member submitted a similar proposal.
However, both proposals were rejected by a majority opposing them, including Governor Kazuo Ueda (植田和男). At the time, year-on-year consumer price inflation excluding fresh food had remained below 2% since January, and some viewed the proposals as premature.
Nevertheless, upward pressure on prices remains. Factors including higher oil prices resulting from developments in the Middle East could affect the wording of future Outlook reports and policy decisions.