TOKYO — The Bank of Japan is considering another interest-rate increase after inflation, which policymakers spent decades desperately trying to create, began behaving as though it had actually been invited.
For years, the BOJ used near-zero rates, negative rates, massive bond purchases, and increasingly experimental monetary policy to coax prices higher.
Officials are now concerned that prices are higher.
“We wanted inflation,” said one central-bank official. “We just meant the good kind, where wages rise, consumers feel confident, and everyone politely stops at exactly 2%.”
Instead, rising food and energy costs, a weaker yen, and persistent price pressures have forced policymakers to consider tightening financial conditions to restrain the phenomenon they previously devoted an entire generation of monetary policy to producing.
Economists stressed that there is no contradiction.
“Central banking is about achieving price stability,” explained one analyst. “Sometimes that means creating inflation because there isn’t enough inflation, and sometimes it means destroying inflation because the inflation you created has become inflation.”
At press time, the BOJ was reportedly preparing new measures to ensure prices rise neither too slowly nor too quickly, but at precisely the speed implied by its PowerPoint.
Reuters - "BOJ eyeing September rate hike, faster pace of tightening, sources say" (August 14, 2026)
