Bank of Japan press conference — 23 January 2026

What this says

At today's Monetary Policy Meeting, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized overnight call rate to remain at around 0.75%.

Member Takata proposed a motion to raise the policy interest rate to around 1.0%, on the grounds that the price stability target has been broadly achieved, the overseas economy is in a recovery phase, and upside risks to domestic prices are high, but the motion was rejected by majority vote.

However, during this period, the mechanism in which wages and prices rise moderately while mutually referencing each other is expected to be maintained, and the underlying rate of increase in consumer prices is expected to continue rising moderately.

As for the risk balance, we consider that the outlook for both economic activity and prices is broadly balanced on the upside and downside.

Given that the current real interest rate is at a very low level, if the outlook for economic activity and prices as described above is realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions.

At present, we observe that firms' price and wage-setting behavior has recently become more active, and under such circumstances, I would like to pay attention to the possibility that the degree of pass-through to domestic prices and the degree of response of domestic prices to import prices may be increasing.

On that basis, as I have been saying, in exceptional situations that differ from normal ones, we may conduct flexible operations, including market operations, in order to encourage stable interest rate formation in the market.

naturally, to repeat, if the economic and price situation in this outlook is steadily realized, or if the probability of that increases, then it is appropriate to gradually adjust the degree of monetary accommodation further.

if our description in the Outlook Report, for example, is more prominent than before, one reason is that we are focusing on the point I mentioned earlier, namely the possibility that the response of domestic prices to exchange rates is becoming larger amid more active wage and price-setting behavior.

In this Outlook Report, we have revised upward the outlook for core-core CPI, which is considered relatively close to the underlying trend of prices, for all fiscal years.

For example, as I mentioned earlier, Board Member Takata took the view that it has already largely reached 2%, and proposed a rate hike this time as well.

As for the question of whether there has been a change over time in the degree of certainty, what I can say clearly is that, for example, comparing this Outlook Report with the October Outlook Report, certainty has increased.

But now, I think the results of hearings, for example, where the reason for price increases is cited as wage pass-through, have been increasing significantly.

To put it plainly, rather than a situation like last time where we focused relatively narrowly on specific items, I think we are now at a stage where we should make judgments based on a diverse range of indicators regarding the pace at which prices and wages continue to rise slowly.

However, we do not necessarily intend to wait for the effects to appear in the data on these variables; we want to capture them earlier.

My answer may be abstract, but last year, for example, we raised rates in January and December, and by carefully examining the effects of each hike as I just described, and by gathering information as early as possible about what might happen going forward, we can assess the impact of each rate hike on the economy and prices, and as a result, determine what pace of rate hikes is necessary.

Of course, as has been discussed for a long time, if we knew clearly what the neutral interest rate is in percentage terms, we could see the distance from it and it would be easier to think about.

I think I may be repeating myself somewhat, but as I mentioned earlier, especially due to fiscal year-end factors, the supply-demand balance for super-long-term bonds has become very unstable.

But as I mentioned earlier, for example, Board Member Tamura holds the view that the price target will likely be achievable somewhat earlier, and Board Member Takata holds the view that it has already been achieved.

On that point, I can only repeat the same answer: we will stay in close contact with the government, take into account each of our roles, and monitor the situation carefully.

First, in our outlook, we expect to reach a situation in the latter half of the projection period that can be described as sustainable achievement of the 2% price stability target, so we do not consider that we are currently behind the curve. However, we will continue to conduct monetary policy appropriately so as not to fall behind the curve.

However, in our expectation, even if such new data comes in, I think the estimate of the neutral interest rate will not change significantly.

However, as for us, since the outlook for prices is as I presented today, we would like to properly conduct monetary policy so that the inflation rate, or the outlook for the inflation rate, does not rise significantly further from here.

Transcript

January 26, 2026 Bank of Japan

Governor's Press Conference — From 3:30 p.m. on Friday, January 23, 2026, for approximately 60 minutes

(Q) Please explain the content of today's Monetary Policy Meeting, including the content of the Outlook Report.

(A) At today's Monetary Policy Meeting, we decided by majority vote to maintain the guideline for money market operations of encouraging the uncollateralized overnight call rate to remain at around 0.75%. Member Takata proposed a motion to raise the policy interest rate to around 1.0%, on the grounds that the price stability target has been broadly achieved, the overseas economy is in a recovery phase, and upside risks to domestic prices are high, but the motion was rejected by majority vote.

Today we published the Outlook Report, so I would like to explain the current situation and outlook for economic activity and prices in line with it. First, regarding economic activity, we judged that although some weak movements have been seen, the economy has been recovering moderately. As for the outlook, while being affected by the trade policies of various countries and other factors, with overseas economies returning to a growth path, and supported by the government's economic measures and accommodative financial conditions, the positive cycle from income to spending is expected to gradually strengthen, and therefore the economy is expected to continue growing moderately. Compared with the previous Outlook Report, fiscal 2025 and fiscal 2026 have been revised somewhat upward due to the effects of the government's economic measures and other factors, while fiscal 2027 has been revised somewhat downward. Regarding prices, the year-on-year rate of change in the consumer price index (CPI) excluding fresh food has been at around the mid-2% level recently, reflecting the effects of rising food prices such as rice, while the pass-through of wage increases to selling prices continues. As for the outlook, with the effects of rising food prices such as rice diminishing and the effects of the government's measures against high prices, the year-on-year rate of change in the CPI excluding fresh food is expected to shrink its positive margin to below 2% in the first half of this year. However, during this period, the mechanism in which wages and prices rise moderately while mutually referencing each other is expected to be maintained, and the underlying rate of increase in consumer prices is expected to continue rising moderately. Thereafter, with the economic improvement continuing and labor shortages intensifying, and medium- to long-term inflation expectations rising, both the underlying rate of price increase and the rate of increase in the CPI excluding fresh food are expected to gradually rise, and are expected to be at levels broadly consistent with the price stability target in the latter half of the projection period. Compared with the previous Outlook Report, the price outlook is broadly unchanged. As for risk factors surrounding this outlook, there are the overseas economic and price developments affected by the trade policies of various countries, firms' wage and price-setting behavior, and financial and foreign exchange market developments, and it is necessary to pay sufficient attention to their impact on Japan's economy and prices. As for the risk balance, we consider that the outlook for both economic activity and prices is broadly balanced on the upside and downside. Regarding the Outlook Report, Member Takata submitted a proposal to state that consumer prices are already at levels broadly achieving the price stability target, and Member Tamura submitted a proposal to state that the underlying rate of price increase will be at levels broadly consistent with the price stability target from fiscal 2026 onward, and each was rejected.

Next, regarding the conduct of monetary policy going forward. Given that the current real interest rate is at a very low level, if the outlook for economic activity and prices as described above is realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions. The Bank of Japan, under the 2% price stability target, will conduct monetary policy appropriately in accordance with economic, price, and financial conditions from the perspective of achieving the target in a sustainable and stable manner.

(Q) The first point is about monetary policy. The Bank of Japan raised the policy interest rate to 0.75% at the previous Monetary Policy Meeting. As a nominal interest rate, this is the highest level in 30 years. Please tell us your view on what kind of impact the rate hike has had on the Japanese economy so far, or whether there has been no particular impact. Also, in the market, some see an additional rate hike as early as the April meeting, but please tell us again your view on the pace of future rate hikes.

The second point is about central bank independence. Regarding the criminal investigation of Fed Chair Powell by the U.S. Department of Justice, former Fed Chairs including Greenspan and Bernanke criticized it as an unprecedented attempt to undermine the Fed's independence. Furthermore, many central bank governors, including ECB President Lagarde and BOE Governor Bailey, signed a joint statement fully supporting Mr. Powell. Why did Governor Ueda not sign this joint statement, and what is your view on the Trump administration's move that threatens central bank independence?

(A) First, regarding the question about the impact of the previous rate hike, since the policy interest rate hike in December last year, market interest rates have risen, and lending rates linked to market interest rates have already increased. Also, many financial institutions have announced that they will raise their short-term prime rates and ordinary deposit interest rates from February onward. Under these circumstances, although not much time has passed since the December rate hike, so far corporate funding demand has continued to increase moderately, and financial institutions' lending attitudes remain proactive. The CP and corporate bond markets also continue to have a favorable issuance environment. In this way, even after the policy interest rate hike, I recognize that Japan's financial conditions remain accommodative. It is thought that it will take considerable time for the effects of the policy change to broadly spread to the real economy and prices through such financial conditions, but the Bank of Japan would like to carefully examine the various effects of past rate hikes, including their impact on the behavior of firms and households and on economic activity and prices. Based on that, regarding future policy conduct, as I mentioned earlier, if the outlook for economic activity and prices is realized, there is no change in the basic thinking that we will continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvements in economic and price conditions. However, the future path of interest rates and the pace of adjusting the degree of monetary accommodation will depend on future economic, price, and financial conditions. At each Monetary Policy Meeting, we would like to make appropriate policy decisions while updating our outlook for economic activity and prices, the risks, and the probability of the outlook being realized, based on the various data and information available at that time.

Regarding the latter question, first of all, I am well aware that ensuring the independence of the central bank is important for achieving price stability. Also, I personally know Fed Chair Powell well and greatly respect him. That said, this matter is also related to U.S. domestic affairs, and therefore, as with our past responses in such situations, I judged that it was appropriate for me as Governor of the Bank of Japan not to participate in this statement.

(Q) My first question is about the impact of the weak yen on prices. The yen has continued to weaken at the 158 level recently, and even compared with before the Bank of Japan began communicating about the rate hike, the yen is at a weaker level. Why has the correction of the weak yen not progressed, and what do you think is the reason? Also, please tell us your view on the impact of the weak yen on prices, especially underlying prices.

My other question is about long-term interest rates. Long-term interest rates have surged. Please tell us your view on the background and how you perceive this. You have said that if there are exceptional movements, you will respond flexibly, but if there were such a flexible response, there is a risk that it could be seen as going against the trend of normalization in which long-term interest rates should be determined by the market, or as consideration for fiscal policy. Including that point, please tell us your view on the current situation and possible responses.

(A) First, regarding the weak yen and prices, as always, I would like to refrain from commenting specifically on the level of the yen's weakness. As a general matter, I believe that exchange rates fluctuate not only due to interest rate differentials but also due to various factors, and I would like to monitor them carefully. On that basis, regarding the impact on prices, naturally, the weak yen raises import prices, and this is passed through to domestic prices, which becomes a factor pushing up the inflation rate for the time being. At present, we observe that firms' price and wage-setting behavior has recently become more active, and under such circumstances, I would like to pay attention to the possibility that the degree of pass-through to domestic prices and the degree of response of domestic prices to import prices may be increasing. I would also like to pay attention to the possibility that domestic prices moving in this way may affect inflation expectations and thereby also affect underlying prices.

Then, there were several questions about the recent rise in long-term interest rates, and first of all, my recognition is that they have indeed been rising at a considerably fast pace. In relation to this, there are voices in the market saying that market views on the future economic and price situation, fiscal policy, and monetary policy are having an impact. In addition, there are also voices saying that the supply-demand balance of super-long-term bonds has become unstable due to year-end factors. On that basis, as I have been saying, in exceptional situations that differ from normal ones, we may conduct flexible operations, including market operations, in order to encourage stable interest rate formation in the market. On this point, we would like to closely monitor the situation while maintaining close contact with the government and taking into account each side's role.

(Q) I would like to ask about two points that differ significantly from your past remarks. First, let me also ask about the pace of future rate hikes. At the press conference half a year ago when the Outlook Report was published, you said that if the Bank's outlook proved wrong and inflation ran higher than projected, you would accelerate the pace of rate hikes. Is the current situation not entering such a phase, and with projected figures returning to or exceeding the outlook from before the announcement of Trump tariffs, please tell us your current policy stance.

And the other point is about central bank independence and your sense of distance from the government and the administration. At the previous press conference when the additional rate hike was decided, I heard your view that the relationship with the Ministry of Finance and the Minister of Finance was good. Minister Katayama has also repeatedly emphasized that point. On the other hand, there is past empirical research showing that in inflationary phases, countries with more independent central banks have been better able to contain inflation. Meanwhile, there is also the view that in a supply-shock-type inflationary phase, the division of roles and policy mix between the government and the central bank are very important. Based on the current realities of the Japanese economy, how do you position this independence? I would like to ask these two points.

(A) First, I believe your question was essentially about whether we are in a situation where actual prices are showing a higher rate of increase than our previous outlook, for example. Comparing this outlook with the October Outlook Report, the price outlook is broadly the same, or the core-core figure has been revised slightly upward, and I do not think we are in a situation where prices have greatly exceeded our outlook and we are chasing that by continuously raising our price forecasts. However, based on the thinking at the time of December, we raised the policy interest rate because the possibility that the price outlook we had held up to that point would be realized had gradually increased.

Then, regarding the latter question about what role central bank independence will play in the period ahead, or how we will approach policy conduct, naturally, to repeat, if the economic and price situation in this outlook is steadily realized, or if the probability of that increases, then it is appropriate to gradually adjust the degree of monetary accommodation further. On this point, I would like to provide thorough explanations while ensuring sufficient communication with the government.

(Q) This is related to the earlier question, but first, regarding the weak yen, you have long said that the impact of exchange rates on underlying prices must be carefully monitored, and this time it is also mentioned in the Outlook Report. Looking at the Summary of Opinions as well, there appears to be an attitude among the Policy Board members of closely watching the impact of exchange rates. In that sense, is the Bank of Japan now recognizing that it must more carefully monitor the impact of the weak yen on underlying prices? Please address this point.

The other point is about long-term interest rates mentioned earlier. You said they have been rising at a considerably fast pace, but the Bank of Japan has not yet conducted operations. Please explain what this means and why. Previously, Governor Ueda, you have taken the stance of placing more importance on long-term interest rates and the shorter end of long-term interest rates than on super-long-term interest rates, in terms of economic activity. Is it correct to understand that if there is a large spillover to such areas, the need to respond with flexible and nimble operations increases? Please address this.

(A) Regarding the relationship between the weak yen and prices, if our description in the Outlook Report, for example, is more prominent than before, one reason is that we are focusing on the point I mentioned earlier, namely the possibility that the response of domestic prices to exchange rates is becoming larger amid more active wage and price-setting behavior. In addition, as the overall inflation rate has risen and underlying prices have gradually risen and approached 2%, there is also an aspect in which we must pay attention even to small movements, even if they are of the same magnitude as before.

Then, regarding the question about the speed of the rise in long-term interest rates, the judgment as to whether it is fast or too fast, or whether it leads to nimble operations, will be made, as I

In this Outlook Report, we have revised upward the outlook for core-core CPI, which is considered relatively close to the underlying trend of prices, for all fiscal years. On the other hand, regarding the balance of risks, while risks to prices are balanced on the upside and downside, within the Board, is there a discussion or atmosphere suggesting that the certainty of achieving the 2% sustainable and stable price stability target is increasing? While I think this might be the case given that the price outlook has been revised upward, on the other hand, since the balance of risks is described as "balanced," I would like to ask about the Board's discussion on whether certainty is increasing in this regard, and how the Governor himself views this, having just raised rates in December, and in light of reports from the January branch managers' meeting and other information since then. That is my first point.

My second point is somewhat related. The power of wage increases to push up prices will be extremely important in future rate hike decisions, and whether such momentum progresses during the April price revision period will be a key point. How much weight will this carry in the next rate hike decision, and how does the Governor currently view the possibility of such price increases spreading?

(Answer) Regarding the distribution or differences of opinion among Board members on whether the underlying trend inflation rate has reached 2%, or how close it has come, as has been published in various forms, there is a certain degree of difference. For example, as I mentioned earlier, Board Member Takata took the view that it has already largely reached 2%, and proposed a rate hike this time as well. Beyond that, in terms of the time series, the average view is that there is still some distance to 2%, and that it will gradually rise to reach 2%. As for the question of whether there has been a change over time in the degree of certainty, what I can say clearly is that, for example, comparing this Outlook Report with the October Outlook Report, certainty has increased. Both take the view that inflation will reach a level broadly consistent with the 2% target in the latter half of the projection period, but I think it can be said that the certainty has increased compared to October. However, to be more precise, if asked whether it has changed much compared to December, I would say that at this point there is not a particularly large difference.

As for the second part of your question regarding the pass-through of wage increases to price increases, when examining this, I believe your question was about how much attention to pay to April, when many price revisions take place. First, quite some time ago, even when prices rose, the cause was the rise in raw material costs, and cases where wages were passed through were relatively few. But now, I think the results of hearings, for example, where the reason for price increases is cited as wage pass-through, have been increasing significantly. In this context, we have been continuously monitoring how much prices respond to wages, and we will continue to do so. Therefore, it is not necessarily the case that data from any particular point in time is overwhelmingly important, but April is a month with a relatively high frequency of price revisions, so it is a fact that we have a certain degree of interest in it. However, if asked whether this is the most important factor for deciding the next rate hike, it is not necessarily so—I would answer that it is one factor among others.

(Question) Let me ask two questions. Today, the House of Representatives was dissolved. In the general election on February 8, the ruling and opposition parties are competing over consumption tax cuts, and regardless of the election outcome, fiscal expansion is likely to be a focus. How does the Governor view the impact on the economy and prices, particularly the possibility of accelerating inflation?

Another point, I'd like to ask about the criteria for rate hike decisions. In the December rate hike, the initial momentum of wage increases was a major factor. What does the Governor think will be the most important factor in deciding the next rate hike?

(Answer) First, regarding the consumption tax cut, nothing has been decided yet, so for example, it is not incorporated into the current outlook. If a tax cut were to be implemented, what impact it would have on the economy and prices is an important point of discussion. However, regarding how much prices would respond to a reduction in the consumption tax rate, there are various views even looking overseas, and it is not easy to determine what would necessarily happen. We will continue to monitor this with attention, but at this point I am not at a stage where I can clearly state what would happen.

As for the second point, at the time of the previous rate hike, I stated that I wanted to see the initial momentum of this year's spring wage negotiations as one of the important deciding factors. I believe your question is about what to focus on when judging future rate hikes. To put it plainly, rather than a situation like last time where we focused relatively narrowly on specific items, I think we are now at a stage where we should make judgments based on a diverse range of indicators regarding the pace at which prices and wages continue to rise slowly. This includes considering how the effects of the previous rate hike will play out in financial, economic, and price conditions.

(Question) I'd like to ask just one point about prices. In advanced economies, during periods when inflation is stable at 2%, the contribution of service prices tends to be larger than that of goods. This is often observed in the United States, but recently I've heard that in the euro area as well, the share of service prices relative to goods prices has been increasing and prices have been rising. Compared to that, in Japan, the share of goods is still large, price fluctuations are significant, and there are occasions when goods prices rise considerably due to supply shocks. In Japan, even recently, restaurant prices have been falling since the year-end. Including that, I'd like to ask about the current state and outlook for the strength of service prices.

(Answer) What you have said is something all of us here also agree with. To repeat, looking at foreign countries, especially advanced economies where inflation is stable around 2%, service prices continue to rise at a certain rate, and that is the main factor. On the other hand, in Japan, this has not necessarily been the case to the same extent. However, looking at the details in the recent data, there is what is called "general services"—I'm not sure if that's the official name. What I find difficult is, first, rents, and second, public services. Rents are rising in Tokyo, but in areas outside major cities they are hard to raise. Meanwhile, in the United States and elsewhere, this is a significant factor in service price increases. As for other public services, due to various institutional reasons, the rate of increase tends to be low, and this is somewhat dragging down the overall service price increase of around 2%. For other services, I believe they are rising at around 2%. However, as you mentioned, among these, accommodation and dining out have components that fluctuate somewhat in the short term due to temporary factors, and it is difficult to determine how much of that will continue in the medium to long term. While comprehensively examining these factors, we will judge the future direction of prices, or the prices of important services within that.

(Question)

I have two questions. Earlier, you mentioned that as a checkpoint for the next rate hike, you want to see the effects of the previous rate hike. How much time do you intend to spend on assessing this?

Second, I'm sorry to bring up the weak yen again, but given your recognition that it is becoming more likely to affect underlying inflation, do you think there is a need to raise rates sooner for the next hike? Or, as you answered earlier, does it remain that the pace depends on future economic and price conditions, and that you will simply look at the data?

(Answer) First, regarding the first half of your question about how much time it takes to properly assess the effects of the previous rate hike, the ultimate key point is how much the rise in interest rates affects major demand components such as capital investment, housing investment, and consumption, and as a result, how inflation moves. I think it takes a very long time for this to become clear. However, we do not necessarily intend to wait for the effects to appear in the data on these variables; we want to capture them earlier. As for how to capture them, as I mentioned at the previous press conference, one way is to monitor how the broad financial environment that affects these things is moving, and another is to frequently conduct hearings with the entities that decide on capital investment and housing investment—for example, corporations—and carefully gather information about their intentions, which should allow us to capture the movements to some extent.

As for the pace of future rate hikes—what the deciding factors ultimately are—I believe that was the second half of your question. My answer may be abstract, but last year, for example, we raised rates in January and December, and by carefully examining the effects of each hike as I just described, and by gathering information as early as possible about what might happen going forward, we can assess the impact of each rate hike on the economy and prices, and as a result, determine what pace of rate hikes is necessary. Of course, as has been discussed for a long time, if we knew clearly what the neutral interest rate is in percentage terms, we could see the distance from it and it would be easier to think about. But since we believe it is not so easy to determine quantitatively in advance what that percentage is, I think we will proceed in the manner I just described.

(Question) Earlier, Governor, you answered a bit about the consumption tax. Let me ask for a supplement. Your earlier answer was about the impact of implementing a consumption tax cut, but I'd like to hear your thoughts on the impact on the economy and prices of the fact that consumption tax cuts are being discussed by most parties in this election campaign. This is because in the market, it is often said that concerns about fiscal discipline are affecting long-term interest rates and the weak yen. In that sense, how does the Governor view the impact on prices and the real economy of consumption tax cuts being discussed to this extent?

(Answer) What to do with the consumption tax rate is fiscal policy, and this is something for the government and the Diet to decide. However, as I always say, we believe it is extremely important for the government to secure market confidence in medium- to long-term fiscal consolidation.

(Question) While the effects of the government's measures against high prices are anticipated, in the Outlook Report, as was asked earlier, core CPI is expected to be roughly flat, but core-core has been revised up compared to the previous report. If there has been any change in your recognition of underlying inflation over this short period, I would appreciate it if you could tell us.

(Answer) Regarding the impact of economic measures on underlying inflation, I believe I mentioned this last time as well, but measures against high prices have a positive impact on disposable income and support consumption, and various growth-promoting measures support the economy—both have a positive impact on the growth rate, and through that, a positive impact on underlying inflation. This is something we were already thinking at the time of December. This time, we quantitatively grasped this and incorporated it into the price outlook, which resulted in the current figures.

(Question) Regarding what the BOJ can do in a situation of rapid interest rate rises, you mentioned earlier that you are in close contact with the government. For example, in this recent situation of rapid interest rate rises, some voices said it was a short-term liquidity crisis with no buyers. In that sense, as measures the BOJ can take during rapid interest rate rises, wouldn't the priority be flexible increases in purchase amounts, and wouldn't a revision of the government bond purchase reduction plan come lower in the order of priority? What is the Governor's view on this ordering?

(Answer) I think I may be repeating myself somewhat, but as I mentioned earlier, especially due to fiscal year-end factors, the supply-demand balance for super-long-term bonds has become very unstable. Taking this fully into consideration, we will work closely with the government and, based on our respective roles, carefully monitor the situation.

(Question) The BOJ has repeatedly stated its outlook that the timing for achieving the price stability target is in the latter half of the projection period. Looking at today's Outlook Report, the core-core figures fluctuate considerably, and looking at the numbers alone, they are strong enough to suggest the price target might already be achieved. In this context, does the Governor have the recognition that within the so-called latter half of the projection period, the timing for achieving the price target is gradually being brought forward?

(Answer) I don't think we are at a stage where we can have such a rigorous discussion, or a rigorous discussion with certainty. But as I mentioned earlier, for example, Board Member Tamura holds the view that the price target will likely be achievable somewhat earlier, and Board Member Takata holds the view that it has already been achieved.

(Question) I think it was largely anticipated from prior media reports that today's rate hike would be postponed, but after the decision to hold was announced after 12:30 today, long-term bonds—2-year, 5-year, and 10-year—were all sold off. Although the moves may be very slight, there has been disappointment selling in long-term bonds. This may be an extremely near-term movement, but since the Takachiwa administration took office, the 10-year government bond yield has risen by 0.75%, while the BOJ has only raised rates by 0.25% during that period. Clearly, long-term bonds have moved beyond what the BOJ intended. If that is not the case, then you are completely behind the curve. How do you intend to respond to this? This has been asked repeatedly at today's press conference, and you say you will discuss and work together with the government, but is the BOJ explaining to the government that if it continues to adopt pork-barrel

Regarding that, I believe that uncertainty remains extremely high. There has been no change in terms of shortening or lengthening that period.

(Q) Earlier, when you were asked about the consumption tax cut, you said that as a fiscal matter, it is extremely important for the government to gain market confidence in its fiscal position over the medium to long term. However, at the Prime Minister Takaichi's press conference on the 19th, when Prime Minister Takaichi put forward for the first time a consumption tax cut on a major tax item, she said that funding sources would be considered going forward. Do you not think that this part — the funding sources — should have been made explicit, or at least indicated in some form, for the sake of medium- to long-term market confidence? Please share your view on this point.

(A) Regarding the possibility of a consumption tax cut, I would like to leave the specific explanation of how it would affect the medium- to long-term fiscal position, including funding sources, to the government.

(Q) Regarding the response to rising interest rates, at the previous press conference you also said that if there were unusual or exceptional movements, you would respond flexibly. Does the fact that no response has been taken at this point mean that the situation cannot yet be called exceptional? And regarding those unusual movements, do you place more importance on the level or the pace?

(A) On that point, I can only repeat the same answer: we will stay in close contact with the government, take into account each of our roles, and monitor the situation carefully.

(Q) Earlier, regarding the weak yen, you said that as the yen's depreciation has come to respond more to domestic price increases and underlying inflation than before, and as we approach the 2% price stability target, we must pay attention to smaller movements than before. Does this mean that the risk of falling behind the curve is increasing with smaller movements than before, or that if yen depreciation accelerates further going forward, the possibility is increasing that we must bring forward policy change decisions more than before to avoid falling behind the curve? Please tell us about that.

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(A) First, in our outlook, we expect to reach a situation in the latter half of the projection period that can be described as sustainable achievement of the 2% price stability target, so we do not consider that we are currently behind the curve. However, we will continue to conduct monetary policy appropriately so as not to fall behind the curve.

(Q) I'd like to ask about the neutral interest rate. In the Outlook Report, the revision of the GDP statistics base is cited as one reason for the upward revision of real GDP for fiscal 2025. I believe the Bank of Japan will recalculate the neutral interest rate based on the data after this base revision — will the neutral interest rate also be revised upward?

(A) We have not yet recalculated it. Stock data and other data are also necessary, so once those are all available, I expect the staff will recalculate it. However, in our expectation, even if such new data comes in, I think the estimate of the neutral interest rate will not change significantly. Also, once the calculation is done, we would like to consider, depending on the case, publishing it, for example in a staff paper.

(Q) Among the members of the Takaichi administration's Fiscal Policy Council, there are members who advocate for a high-pressure economy. Regarding this, opinions encouraging a high-pressure economy have also been expressed from within the Bank of Japan for some time. The fact that real interest rates are currently at an extremely low level can, in a sense, be said to mean that a high-pressure economy is being practiced. However, what is happening under that high-pressure economy is labor shortages and high prices, and the public is, if anything, crying out — it is being perceived rather as a troubling situation. In addition, since last autumn, the market situation has changed somewhat and the phase has shifted. Under these circumstances, I think a high-pressure economy is precisely a misjudgment, or perhaps an anachronism — what do you think? Speaking of a high-pressure economy, wouldn't you say that the 2% inflation target is also an excessive target under the current circumstances?

(A) Personally, I have not discussed in detail what kind of thinking the people advocating a high-pressure economy have in saying such things, so it is difficult for me to state clearly. However, as for us, since the outlook for prices is as I presented today, we would like to properly conduct monetary policy so that the inflation rate, or the outlook for the inflation rate, does not rise significantly further from here.

(Q) Please tell me one more point about the movement of long-term interest rates. Earlier, the Governor said that you would stay in close contact with the government. Today, Finance Minister Katayama said at a press conference that the panic in the domestic bond market has subsided — do you share the same recognition?

(A) To put it plainly, volatility remains

The Cadence Brief

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