The Bank of Japan (BOJ) is set to decide at its upcoming policy meeting whether the underlying inflation rate has hit its 2 percent target, according to sources familiar with the matter. This decision, expected at the Oct. 29-30 meeting, would mark a significant milestone for the central bank, signaling the end of its long-standing battle against deflation.
The BOJ first set the 2 percent inflation target in January 2013, but achieving it has taken nearly 14 years. The central bank is widely expected to keep its key interest rate unchanged at 1.25 percent, following last month's rate hike to the highest level in 31 years.
The BOJ plans to address the inflation target in its Outlook for Economic Activity and Prices, to be released after the meeting. While Japan's core consumer prices have risen by more than 2 percent annually since 2022, the BOJ has emphasized the need to assess underlying inflation and wage growth, rather than just headline price increases.
The central bank is also considering the impact of rising oil costs and AI-driven demand on its inflation outlook. The latest economic outlook report will include forecasts for core inflation and real GDP growth for fiscal 2026 through fiscal 2028.