The BOJ indicated for the first time that the rate of increase in underlying inflation had effectively reached its 2% policy target. As a longstanding monetary policy challenge reaches a milestone, attention is turning to the future course of monetary policy.
At the end of last month, the BOJ announced for the first time its assessment that the rate of increase in underlying inflation had effectively reached the 2% target it had pursued for many years. Although the view was expressed that the framework of its monetary easing policy had reached a milestone, no specific indication was given as to the timing or methods of any policy change.
Despite this assessment that the target had been reached, the article conveys no sense of euphoria and uses cautious language regarding the future course of policy management. It conveys the recognition that longstanding policy challenges remain, while market reactions and the exit strategy are expected to draw attention as potential risk factors.
The focus is expected to shift to maintaining the inflation target stably and considering the appropriate timing and methods for exiting or adjusting monetary policy. Market participants are expected to closely monitor the development of the exit strategy and the possibility of reviewing interest-rate levels and asset purchases.