The 2% price stability target set by the government and the Bank of Japan was reached after more than 13 years. In its Outlook for Economic Activity and Prices, the Bank of Japan judged that the underlying inflation rate was consistent with the target and indicated that it would leave the policy rate unchanged at approximately 1.25%.
It was reported that, after many years, the 2% year-on-year consumer price inflation target set by the government and the Bank of Japan in 2013 had been reached. This was seen as a major turning point in monetary policy, with inflation control becoming its central focus.
In its Outlook for Economic Activity and Prices released on the 30th, the Bank of Japan judged that the underlying inflation rate excluding the government's measures against high prices was broadly consistent with the target and said that the 2% target had been reached. However, it was reported that the Bank had decided to leave the policy rate unchanged at approximately 1.25%.
As the current policy rate is at its highest level in approximately 31 years, interest rates on mortgages and loans to small and midsize companies have risen. The Bank indicated a policy of not rushing to raise rates while considering economic growth, and reportedly decided to forgo consecutive rate hikes from September onward.
With concerns about an upside in prices due to persistently high crude oil prices, more voices in financial markets are reportedly expecting a rate hike at the next meeting in December.
Regarding future policy management, Governor Ueda Kazuo (植田和男) said that stabilizing prices at around 2% was important and indicated that he intended to continue raising interest rates. In light of the government and the Bank of Japan reaching a turning point, he also referred to the need to review policy.