Bank of Japan says inflation is in line with 2% target — CNBC

The Bank of Japan said that core inflation in Japan is “generally consistent” with the 2% target. This is the regulator’s first such assessment since it set its inflation target in 2013. At the same time, the central bank left its key rate unchanged at 1.25%, the highest level since 1995.

The decision was adopted by a majority vote

Eight members of the Bank of Japan’s board voted to keep the rate unchanged, while one voted against. Board member Hajime Takata proposed raising the rate to 1.5%.

As CNBC reports, 16 economists surveyed before the decision expected the Bank of Japan to lay the groundwork for a rate hike in December or January. Thirteen of them forecast that the terminal rate in the monetary tightening cycle would stand between 1.75% and 2% by mid-2027.

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Inflation and wages are rising

Japan is facing a weak yen and high energy prices, which are supporting inflation. At the same time, experts cited by CNBC noted that consumer price index readings are being restrained by energy subsidies provided by the Takaichi administration.

In September, core inflation in Japan stood at 2.1%, exceeding expectations and reaching its highest level since the beginning of 2026. According to the latest government data, real wages rose by 1.5% year-on-year in August, marking the eighth consecutive month of positive dynamics.