At the Bank of Japan's Monetary Policy Meeting, it was stated that the underlying inflation rate had reached 2%. The target pursued over many years has effectively been reached, but the focus going forward will be on curbing upside risks to prices and stabilizing them.
Following its Monetary Policy Meeting, the Bank of Japan indicated that the underlying inflation rate, which it had pursued as part of its effort to overcome deflation, had reached the 2% target. This marked a milestone after a long journey of more than 13 years since the inflation target was introduced. Alongside voices in financial markets welcoming the achievement, views spread that they wanted to assess the future course of prices and the sustainability of wage increases.
Governor Ueda Kazuo (植田和男) indicated that achieving a 2% inflation rate at a given point in time would not be sufficient, emphasizing the Bank's continued commitment to price stability and the establishment of sustained wage increases. Voices from the public included both complaints that higher living costs were affecting household budgets and concerns that wage growth was failing to keep pace with price increases.
The Bank of Japan is expected to place even greater emphasis going forward on managing policy to curb upside risks to prices, against a backdrop of yen depreciation caused by prolonged monetary easing and the effects of external factors. With sustained wage increases and the completion of efforts to overcome deflation as the backdrop, the Bank's ability to guide the economy toward stable growth will remain under scrutiny.
The focus will now shift to how to balance curbing upside risks to prices with stabilizing wage trends. Against the backdrop of the effects of prolonged monetary easing, the Bank of Japan has reiterated its policy of securing the sustainability of the 2% target while preventing a severe downturn in the economy. Fine-tuning of monetary policy will attract attention depending on future indicator trends and changes in the external environment.