Japan’s largest opposition party just made the Oct. 27 general election more interesting with a surprise policy that could have significant implications for the race and, potentially, for the economy as a whole.　

The Constitutional Democratic Party of Japan issued a platform statement Monday that calls for redefining the Bank of Japan’s inflation target to “above 0%” from the current 2%.

Such an adjustment in the target could result in higher interest rates and a stronger yen, which might help households and small businesses while also possibly shaking markets globally as stock prices in Japan fall and as carry trades unwind.

“I was surprised by the CDP’s inflation target of ‘over 0%,’” Yuichiro Tamaki, who heads the Democratic Party for the People, another opposition party, wrote on social media platform X on Tuesday.

“If it needs to be lowered to around 0%, quite hawkish monetary policies, including more rate increases, would be necessary.”

Tamaki also pointed out that wages and inflation are closely connected.

“Setting the inflation target at 0% would mean the wage hike rate would be 0% as well. Did the CDP give up on wage hikes and economic growth?” he noted.

In a response via X, Kenta Izumi, who headed the CDP until last month, said Tamaki had misunderstood the point.

He explained that “over 0%” could include 2% or 3% as well.

The CDP’s intention is to increase real wages, Izumi argued, hinting that lowering the inflation target might help do so.

He conceded that he was actually surprised that the CDP executive team settled on the “over 0%” language. Izumi lost the CDP leadership race last month against former Prime Minister Yoshihiko Noda.

The government and the BOJ signed a communique in 2013 that includes the goal of realizing stable and sustainable 2% inflation “as soon as possible.”

The BOJ's then-governor, Haruhiko Kuroda, initially said that the target could be achieved in two years with ultraloose monetary policy.

But until recent years, the goal had been elusive.

While inflation has risen above 2% for more than two years, the central bank says this is cost-push inflation, and as such, the country has not achieved the goal.

“If prices don't grow at a rate of around 2%, there's a risk of falling into deflation,” said Tomohisa Ishikawa, chief economist at the Japan Research Institute.

“In other words, without a buffer of around 2%, it's difficult to maintain inflation consistently above 0%. Thus, I believe that targeting inflation of 'over 0%' is a goal that is highly susceptible to deflationary pressures,” Ishikawa noted.

Smaller companies and households tend to get squeezed when the yen is weak while large companies tend to do well, as many are exporters.

“In that sense, I can understand the logic behind raising interest rates to curb inflation and strengthen the yen, as this could make life easier for ordinary people,” but the CDP's inflation target is still questionable, Ishikawa said.

Adjusting a specific inflation target is a highly complex economic question, so “I wonder if it's appropriate to have politicians decide on such a matter” while the BOJ is independent from politics, he added.

The CDP has also pledged to support middle-class households by partially refunding sales taxes paid. It also aims to raise the average hourly minimum wage to ¥1,500 ($10).

The party plans to establish an independent body under parliament to monitor the use of public funds and require the government to draft a medium-term fiscal policy framework.