BoJ’s review on the concept and measurement of underlying inflation
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Here are key points from the Bank of Japan’s (BoJ) review on “The Concept and Measurement of Underlying Inflation” by the Monetary Affairs Department Underlying inflation must be judged comprehensively by examining a wide range of information on economic activity and prices from multiple perspectives. If recent rises in food prices were to persist, they could exert a sustained upward impact on overall consumer prices. Composite indicators on medium- to long-term inflation expectations show a gradual increase toward 2%. Gap has been on an improving trend, labor market conditions remain extremely tight, and wages are rising moderately. Firms continue to pass on higher wages, mechanism in which wages and prices rise moderately in tandem has been taking hold. Underlying inflation rate is rising moderately toward 2%. From the perspective of the sustainable achievement of 2% target, it will also be necessary to monitor whether underlying inflation becomes firmly anchored at around 2%. Increases in crude oil prices can affect underlying inflation in both upward and downward directions. Bank of Japan FAQs The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted…
Filed under: News - @ March 30, 2026 7:19 am