Bank of Japan declares 2% inflation reached, 13 years after setting the goal

Japan's central bank has declared victory over deflation. On Friday the Bank of Japan said inflation had reached its 2 percent target, more than 13 years after it adopted the goal in 2013 alongside a programme of large-scale monetary easing.

The confirmation came as the BoJ's board voted eight to one to keep its key interest rate at 1.25 percent. In a statement on its website, the central bank said underlying consumer price 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". It also revised up its inflation forecast and restated its readiness to keep raising borrowing costs to head off mounting price risks.

The milestone follows a week in which the US Federal Reserve and the European Central Bank both left policy rates unchanged. Japanese officials are expected to raise rates again in December as inflationary pressure builds, according to Token Times.

The data behind the call: core inflation in September stood at 2.1 percent, up sharply from 1.7 percent in August, according to government figures released last week. For decades successive governments had struggled to escape a spiral of falling prices, and the 2 percent goal was set in 2013 as the BoJ launched its easing measures. Core inflation occasionally topped the level in the early 2020s, but Friday was the first time the central bank confirmed the long-term price trend had been achieved.

Markets took the hold in their stride. The yen inched higher after the decision, which was widely anticipated, while the dollar tracked Treasury yields lower as a fresh wave of selling in AI shares drove investors towards safer assets.