Tokyo, Oct. 30 (Jiji Press)--The Bank of Japan said Friday that the country's underlying inflation has reached its 2 pct target, marking a new phase in its monetary policy nearly 14 years after it first set the inflation goal and launched large-scale monetary easing.

The central bank expressed its assessment of inflation excluding temporary factors in its quarterly Outlook for Economic Activity and Prices report adopted at a two-day policy meeting that ended the same day. The BOJ is set to shift its focus to curbing inflationary pressures to stabilize the inflation rate at around 2 pct.

At the Policy Board meeting, the BOJ decided to maintain its policy of guiding the unsecured overnight call rate, Japan's benchmark short-term interbank rate, to around 1.25 pct. Having raised the policy rate to the current level at its previous policy meeting in September, the bank opted to stay put this time to assess the effects of the hike on the economy, prices and corporate loans for now.

BOJ Governor Kazuo Ueda will explain the policy decision at a news conference later on Friday.

The BOJ believes that financial conditions in Japan remain accommodative after the latest rate hike. It plans to continue raising interest rates, as upside risks to inflation are growing due to persistently high crude oil prices amid tensions in the Middle East, rising global demand related to artificial intelligence and higher import costs stemming from the yen's weakness.

Bank of Japan Governor Kazuo Ueda heads for a monetary policy meeting at the central bank's head office in Tokyo on Friday. (Pool photo)
The Bank of Japan's Policy Board holds a monetary policy meeting at the central bank's head office in Tokyo on Friday. (Pool photo)

[Copyright The Jiji Press, Ltd.]