Ueda plays down BOJ inflation victory, says government must declare it

Ueda offered further remarks on the day:

• He said he is not yet in a position to say the inflation target has been met.
• In his view, inflation needs to stay near 2% on a stable and sustained basis.
• The central bank has no intention of formally announcing at some stage that the price goal has been reached.
• Ending the deflationary period is a call for the government to make.
• He declined to comment on any potential revision to the joint agreement with the government.
• At present, he said, the risk of inflation exceeding the target cannot be overlooked.
• Those overshoot risks are not necessarily greater than they were a month earlier.

Earlier, the BOJ's outlook report had pointed out that underlying inflation is broadly aligned with the 2% target and likely to remain so. Ueda also reiterated that position in his preceding remarks, available here. Together with the upward revision to their inflation projections, this amounts to a near-announcement of victory on prices. Ueda even acknowledged that every board member concurred that underlying inflation has now reached the 2% target.

Still, Ueda is seeking to minimize the significance rather than leverage it to accelerate rate increases. That speaks volumes about the BOJ's current willingness to act more aggressively.

Although some might see the BOJ as having become more assertive, Ueda is offering a timely reminder that the institution still leans toward caution and gradual steps. A further rate increase in December remains far from certain.