In its Outlook Report, the Bank of Japan assessed that the underlying inflation rate had effectively reached 2% year on year. The policy rate was left at around the current level of 1.25%, and the Bank was said to be considering a rate hike at the next December meeting.
In the Outlook Report released after its monetary policy meeting, the Bank of Japan presented the view that, even from a long-term perspective, the underlying inflation rate had effectively reached the 2% target. This was interpreted as a turning point from ending deflation to establishing price stability, and attention focused on the direction of monetary policy. The meeting indicated a policy of leaving the policy rate unchanged at around 1.25%, effectively considering a rate hike at the next meeting.
At an afternoon press conference the same day, Governor Ueda Kazuo (植田 和男) explained in detail the reasons for leaving rates unchanged and the policy stance after inflation reached 2%. The Bank of Japan was reported to have cited the establishment of corporate pass-through and wage-raising behavior against a backdrop of higher resource prices, among other factors, and to have suggested flexibility in future policy operations.
Interpretations of the achievement of the Bank of Japan's 2% inflation target and changes in policy operations have been reported as signifying a departure from the long-running response to deflation, viewed in the context of the 2013 joint statement and the subsequent course of monetary easing. The history of deferring a rate hike at the previous September meeting, despite expectations of a hike within three months, and then deferring hikes at two consecutive meetings was also reviewed.