Japan's Central Bank Says Inflation Goal Is Met
The Bank of Japan holds its rate at 1.25%, the highest since 1995, and says underlying inflation is "generally consistent" with its 2% target for the first time since it set the goal in 2013.
The Bank of Japan's head office in Tokyo, August 2026.Illustration by The Good Times, based on a photo by Syced / Wikimedia Commons (CC0)
The Bank of Japan said underlying inflation is "generally consistent" with its 2% target, the first time it has made that judgment since it adopted the target in 2013. The decision came at the end of a two-day meeting. It held its policy rate at 1.25%, the highest since 1995, on an 8-1 vote; board member Hajime Takata wanted a rise to about 1.5%. The bank had raised the rate to 1.25% from 1% in September. The bank raised its inflation forecast for the 2027 fiscal year to 2.6% from 2.4% and said it is ready to keep raising rates. Governor Kazuo Ueda left the door open to a rise at the next meeting, in December, and economists surveyed by CNBC expect the bank to prepare one for December or January. "Now that underlying inflation has reached 2 percent, it's not desirable for it to clearly deviate upward," Ueda told a news conference.
The Bank of Japan judged that underlying inflation is "generally consistent" with its 2% target, the first such assessment since the target was set in 2013, and kept its policy rate at 1.25% at the end of a two-day meeting. It raised the rate to that level, from 1%, in September, taking borrowing costs to their highest since 1995.
The vote was 8-1. Board member Hajime Takata dissented in favor of a rise to about 1.5%. The bank raised its inflation forecast and said it is prepared to keep raising rates. Governor Kazuo Ueda left the door open to a rise at the next meeting in December, and economists surveyed by CNBC expect the bank to prepare one for December or January.