The BOJ judged that underlying inflation had reached 2%. Price trends excluding the impact of conditions in the Middle East are considered broadly consistent with the target, and debate continues over maintaining that level on a stable basis.
At its policy meeting on 30 October, the BOJ reportedly judged that underlying inflation had reached its 2% target. This came approximately 14 years after the target was set in 2013, and the BOJ also referred to the gap between this assessment and the public's experience of rising prices.
Behind the daily rise in prices is underlying price momentum excluding temporary factors such as worsening conditions in the Middle East. This is currently considered to be at a level where wage increases and price rises are gently supporting each other. Moderate price increases accompanied by wage growth are seen as a foundation for revitalizing the economy, and maintaining this virtuous cycle will remain a challenge.
In future policy management, it will be necessary to avoid excessive acceleration in inflation. While continued rate hikes are under consideration, an agile policy approach and careful assessment of the neutral interest rate are considered important to avoid an economic slowdown caused by excessive monetary tightening. The BOJ left its policy rate unchanged at the meeting to assess the effects of its previous rate hike.
The BOJ is also reportedly considering shifting away from an accommodative financial environment over the longer term while strengthening coordination with the government. Issues concerning consistency between the government's and the BOJ's efforts to overcome deflation, as well as a possible review of their joint statement, may be raised.