The Bank of Japan began its 2-day Monetary Policy Meeting, and is expected to determine that the target annual inflation rate of 2% has effectively been reached. After raising the policy rate to around 1.25% at its previous meeting, the Bank is expected to maintain its stance of keeping the rate at that level.
The Bank of Japan began its Monetary Policy Meeting at its head office on the 29th. The meeting will run for 2 days, and the Bank is expected to determine whether the inflation rate has reached its target of 2% annually. No major change to its large-scale easing measures is currently expected. The meeting's progress and the decision itself are seen as having a major impact on the future conduct of monetary policy.
In the past, the Bank set out to achieve "2%" in 2013 and introduced large-scale monetary easing, continuing to operate policy over an extended period with the aim of overcoming deflation. This decision is attracting attention as an assessment of current conditions in that context, and marks a point at which price and growth trends will be reviewed once again.
The treatment of the policy rate, which was raised to around 1.25% at the previous meeting in September, is being taken into account, and reports indicate that the Bank plans to maintain the same level this time as well. Financial markets and economists are focused on whether price trends are consistent with the target and whether the timing of a substantial reduction in monetary easing is approaching.
Depending on the outcome, fine-tuning of the policy stance, including the treatment of interest rates, and an impact on financial markets are expected. However, based on reports available at present, specific timing or methods of change have not been stated. The key points are both whether to judge that 2% has been reached and how to assess the policy of maintaining the current interest-rate level.