Bank of Japan Says 2% Goal Is Met for First Time Since 2013

The Bank of Japan said Friday in Tokyo, late Thursday ET, that underlying inflation is "generally consistent" with its 2% target, a first since it set that goal in 2013.

Until now, the bank had only said inflation was approaching 2%, CNBC reported. The bank held its overnight rate at about 1.25%, the highest since 1995, in an 8-1 vote, according to its policy statement. CNBC said board member Hajime Takata dissented in favor of a hike to 1.5%.

The outlook report raised the fiscal 2027 forecast for consumer prices excluding fresh food to 2.6% from 2.4%, and said price risks are "skewed to the upside" as firms lean more toward raising wages and prices. The other side: experts told CNBC that energy subsidies are holding headline price numbers down, so part of the pressure is masked.

The bank also sped up its exit from the stock market. Starting January 2027, it will sell its exchange-traded funds at about 860 billion yen a year at book value, up from 330 billion, per its ETF decision. That cuts the time to finish selling from about 112 years to about 43. Brisk, by central bank standards.

How it works: "underlying" inflation strips out jumpy items like fresh food and energy, so it shows whether price rises are spreading through wages and services. Saying it has reached 2% is the test the bank set for itself before raising rates further. Why crypto readers care: for years, near-zero Japanese rates made the yen a cheap currency to borrow and invest elsewhere. Higher Japanese rates make that trade costlier, and unwinding it can pull money out of risk assets, crypto included.

All 16 economists in a CNBC survey expect the bank to set up a hike in December or January.

In our opinion: Thirteen years of "approaching" just became "consistent," and that one word change is the bank clearing its own bar for more hikes. The stake for crypto is the cheap-yen funding that has backed risk trades worldwide for years. Watch the December meeting and the yen, because a fast move in either can spill into crypto.