Comment

You must deliver it to Haruhiko Kuroda. Despite his caricature of being a laggard in a world of rising interest rates, the head of the Bank of Japan has been forward-thinking as he sought to beat his inflation target. It just took time to get there. Six years, in fact.

As tempting as a victory lap may be for Kuroda, who retires next year, more hard work awaits. With inflation above the 2% target for the fourth consecutive month in July, figures showed on Friday, choices that were once considered so remote as to be almost theoretical are looming. Is Kuroda maintaining his ultra-easy position or taking a small step towards adjusting interest rates to levels that are not so abnormally low by global standards?

And what’s normal in a country that flirted with deflation for much of the past three decades, pioneered zero rates and was an early adopter of quantitative easing ? In some ways, the unconventional has become standard operating procedure in Japan and quite familiar in the West. The arguments in favor of a deviation must be convincing. At the same time, if prices continue to climb towards 3%, it will be increasingly difficult for Kuroda to simply say the equivalent of “No, no, no” whenever a question is asked about the possibility of a slight adjustment to the settings.

When the BOJ wrote into its policy the desire to go beyond 2%, few people paid attention. Consumer prices were falling in September 2016. The idea was that getting inflation above target – and tolerating it for a while – increased the chances of it stabilizing around the objective. It wasn’t just necessary to cross the line; inflation is expected to “stay above target in a stable manner”. Welcoming the overshoot was meant to underscore the seriousness of the BOJ. The approach was later adopted, to varying degrees, by the Federal Reserve and the European Central Bank.

Kuroda might now rightly ask why he needs to do anything: inflation is still low compared to most major economies, and with the prospect of a global recession looming, why risk missing a hike? that he – or his successor – will have to withdraw. It is also justified to be skeptical that the ingredients are there for a sustained price push.

Of course, the costs are higher than anyone can remember, with electricity and gas bills accounting for about half of July’s 2.4% increase. The pain at checkout will only increase in the near term, with another wave of price increases expected in the fall. Some 8,000 groceries will cost more from next month, according to Teikoku Databank; everything from sushi to beer should be affected.

Kuroda is perhaps the latest major currency player to buy into the idea that this is all “transitional,” to use a term once favored by Fed Chairman Jay Powell, who has since been buried. The BOJ expects inflation to stay in the 2% range this year before falling next year. While the bank’s inflation forecasts in the past could generously be called optimistic, there is reason to believe that this time they are correct. There are few signs of the salary increases that are crucial to maintaining momentum. A 31 yen increase in the minimum wage could well be a record, though broadly in line with trends over the past decade, and unlikely to move the needle.

While summer bonuses have increased in large companies, small and medium-sized businesses in the middle are in a hurry. Real wages have fallen for three straight months when adjusted for inflation. In an encouraging move, Prime Minister Fumio Kishida has made raising wages a policy goal, but he hasn’t spoken at all about the tough labor market reforms that would be needed to turn that vision into reality.

Without wage increases, the current wave of price hikes could look more like Japan’s two sales tax increases in the past decade — a temporary blow that passes, leaving consumers’ wallets permanently lighter. With the recession looming, the pressure on the bank to tighten is beginning to fade. Kuroda can move slowly. It took time, but the world is getting closer to him.

More from Bloomberg Opinion:

• It took forever to reach 2%. Now It’s Too High: Moss and Reidy

• What good is hiking when the recession is looming? : Gearoid Reidy

• Case of rate hikes in disputed territory: Daniel Moss

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously, he was Bloomberg News’ economics editor.

Gearoid Reidy is a Bloomberg News editor covering Japan. He previously led the breaking news team in North Asia and was the deputy chief of the Tokyo bureau.

More stories like this are available at bloomberg.com/opinion