BOJ Deputy Governor Himino: Central bank’s goal is stable prices, preventing excessive inflation or deflation to keep the economy on a steady growth ...

BOJ Deputy Governor Himino: Central bank’s goal is stable prices, preventing excessive inflation or deflation to keep the economy on a steady growth path

BOJ Deputy Governor Himino: Central Bank’s Goal Is Stable Prices, Preventing Excessive Inflation or Deflation to Keep Economy on Steady Growth Path

The Bank of Japan (BOJ) remains committed to maintaining price stability as its core mandate, ensuring the economy avoids excessive inflation or deflation while fostering sustainable growth, according to Deputy Governor Ryozo Himino in a recent speech. Speaking in Eastern Hokkaido on September 2, 2025, Himino emphasized the central bank’s role in balancing short-term economic fluctuations with long-term stability.

Economic Outlook and Price Trends Himino highlighted the complex interplay between U.S. trade policies and Japan’s economic activity. While U.S. tariff adjustments and geopolitical uncertainties pose risks to Japanese exports, the BOJ’s Tankan survey indicates that corporate profit projections and fixed investment plans remain resilient. At the macroeconomic level, export prices on a contract currency basis have stayed stable, and industrial production has shown little decline. However, Himino noted that tariff impacts may take time to materialize fully, with risks of larger-than-expected effects warranting close monitoring.

On inflation, Himino outlined a nuanced outlook. Headline consumer price index inflation stood at 3.1% in July 2025, driven by surges in rice and food prices. However, the BOJ’s baseline scenario projects a gradual decline in headline inflation as temporary factors dissipate. Underlying inflation remains below the 2% target but is approaching it, supported by wage-price spirals and labor shortages in key sectors.

Monetary Policy Strategy To address these dynamics, the BOJ plans to continue raising policy interest rates in line with improvements in economic activity and price trends. Real interest rates—nominal rates adjusted for inflation—remain low, reflecting persistent inflationary pressures. Himino also reiterated the bank’s phased reduction in Japanese government bond purchases, aiming to shrink monthly purchases to ¥2 trillion by spring 2027. This adjustment seeks to restore normal market functioning while avoiding abrupt disruptions to financial stability.

Balancing Risks Himino underscored the importance of navigating dual risks: upside inflationary pressures from global supply shifts and downside risks from trade policy uncertainties. The BOJ’s approach prioritizes flexibility to respond to evolving scenarios, aligning with insights from global central banking experts.

By prioritizing price stability and adapting to shifting economic conditions, the BOJ aims to anchor expectations and support Japan’s long-term growth trajectory.

(https://www.boj.or.jp/en/about/press/koen_2025/ko250902a.htm): Bank of Japan, Speech by Deputy Governor Himino (September 2, 2025)
(https://www.boj.or.jp/en/mopo/outline/index.htm): Bank of Japan, Outline of Monetary Policy