The Bank of Japan said today that inflation had hit its 2% target, more than 13 years after it adopted the goal in a bid to pull the economy out of deflation, but held off hiking interest rates for now.<\/p>\n
Successive governments struggled for decades to pull the country out of a spiral of deflation – sustained falls in prices that are harmful for economic growth – and the 2% goal was set in 2013 as the Bank of Japan launched massive monetary easing measures.<\/p>\n
While core consumer inflation intermittently topped the level in the early 2020s, today marked the first time that the central bank confirmed the long-term price trend had been achieved.<\/p>\n
“Underlying CPI (consumer price index) inflation is at a level that is generally consistent with the price stability target of two percent, and is expected to remain at around that level,” the central bank said on its website.<\/p>\n
Despite the central bank’s view of sustainable inflation, Prime Minister Sanae Takaichi’s government has been more cautious about officially declaring victory over deflation.<\/p>\n
“We’re not there,” Economy Minister Minoru Kiuchi said last week.<\/p>\n
Takaichi is seen as prioritising economic stimulus measures over controlling inflation, at the risk of giving the impression of pressuring the Bank of Japan to keep rates low.<\/p>\n
The Bank of Japan also said in a statement it had kept its key interest rate unchanged at 1.25% after an eight-to-one majority vote, following similar moves over the past two days by the US Federal Reserve and the European Central Bank.<\/p>\n
However, Japanese officials are expected to hike in December as inflationary pressure builds.<\/p>\n
Japan has faced sustained consumer price increases since spring 2022, and the Bank of Japan began tightening rates in March 2024 after 10 years of ultra-loose monetary policy.<\/p>\n
Core inflation in September stood at 2.1%, sharply up from 1.7% in August, according to data released by the government last week.<\/p>\n
The Bank of Japan warned today that the year-on-year rate of increase in CPI excluding fresh food “is likely to accelerate to a level clearly above 2%”.<\/p>\n
It said this was because of various factors including a rise in oil costs that “is expected to push up prices, mainly of energy and goods”, and the rise in the price of semiconductors, reflecting the increase in global AI-related demand.<\/p>\n
The depreciation of the yen is also a factor, it added.<\/p>\n
Marcel Thieliant of Capital Economics said “further tightening looks very likely and we expect the policy rate to reach 2% by the middle of next year”.<\/p>\n
“If anything, the risks are tilted towards further tightening thereafter,” he added.<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Japan said today that inflation had hit its 2% target, more than 13 years after…\n","protected":false},"author":2,"featured_media":671334,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-671333","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/671333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=671333"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/671333\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/671334"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=671333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=671333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=671333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}