Japan's Inflation Rate Nearing 2%: BOJ's Ueda Signals Imminent Increase
The Bank of Japan (BOJ) concluded its policy-setting meeting earlier today, with Governor Kazuo Ueda outlining the current state of the Japanese economy and the central bank's future plans.
During a press conference following the meeting, Ueda announced that Japan's underlying inflation is approaching the central bank's target of 2%. However, he also emphasized that the inflation rate is still slightly below the target, currently hovering around the mark.
In a move signaling further monetary policy normalization, the BOJ decided to sell its holdings of exchange-traded funds (ETFs) and Japanese real estate investment trusts (J-REITs). The BOJ will start gradually selling its ETF holdings at an estimated pace of around 330 billion yen per year, while the annual sales of J-REITs are expected to be approximately 5 billion yen.
Ueda defended the past ETF purchases by the BOJ, stating that they were 'necessary' at the time. He also expressed confidence in the Japanese economy's ability to withstand the downward pressure from U.S. President Donald Trump's high tariffs.
In a positive development, Ueda predicted that it will take over 100 years for the BOJ to sell off its ETFs purchased under the large-scale monetary easing policy. This indicates a gradual and measured approach to normalizing the monetary policy.
Despite these steps towards normalization, the BOJ kept its key interest rate unchanged at 0.5% in September 2025, with a 7-2 vote. This decision suggests that the BOJ remains committed to maintaining a supportive monetary environment for the Japanese economy.
In conclusion, the Bank of Japan's policy-setting meeting saw the central bank take steps towards monetary policy normalization, while also expressing confidence in the resilience of the Japanese economy. Governor Ueda's statements provide a clear picture of the current economic situation and the BOJ's future plans.
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