The Bank of Japan announced that underlying inflation had reached its 2% target. Although the target was achieved over approximately 14 years, a new difficult path toward establishing 2% inflation lies ahead.
The Bank of Japan announced on the 30th that the underlying inflation rate had reached 2%. The BOJ’s 2% price stability target was introduced in January 2013, and it has finally been reached after 14 years.
Prices initially rose as a result of monetary easing, but growth slowed following the 2014 consumption tax increase. Further easing measures, including negative interest rates and yield curve control, followed, but it took time to reach the target.
Global inflation accelerated amid the worsening situation in Ukraine and surging crude oil and grain prices. In Japan, labor shortages and higher raw-material costs led to more price pass-through and wage increases. These became factors supporting price growth.
The BOJ has indicated that it will seek to establish inflation steadily at the 2% level, and expectations of a rate hike in December are also spreading in the market. At a press conference, Governor Ueda Kazuo (植田 和男) maintained his stance of not declaring victory and indicated that he would continue seeking the endpoint of the battle against inflation.