Policy Board member Junko Koeda stated that the central bank’s role in fighting inflation is stronger now than it was before. With Japan’s core inflation hovering close to 2% and headline CPI running around 3%, the BOJ is no longer trying to coax prices upward. It’s trying to keep them from running away.
From deflation fighter to inflation hawk
Japan’s inflation peaked at 4.2% in early 2023, then settled into a range between 2% and 3%. The BOJ responded by dismantling its ultra-loose framework in 2024, delivering its first rate hike since 2007.
As of March 2026, the BOJ’s short-term policy rate sits at 0.75%, the highest level since September 1995.
The mechanics of the pivot
