IMF statement:
- No need for further BOJ easing now, but should act quickly if inflation stagnates or growth disappoints
- Japan economy weathering impact of sales tax hike, expected to resume recovery in 2nd half of this year
- Expect BOJ’s 2% inflation target to be achieved by 2017, later than envisaged by BOJ
- Near-term risks to Japan economy are balanced but sustainability of recovery at risk on soft China growth, geopolitical tensions
- More forceful structural reforms needed to tackle growth impediments to Japan’s economy
- Cutting corporate tax rate has economic benefits but must be accompanied by compensating expenditure, revenue steps
- Providing more information about asset purchases beyond 2014 would enhance BOJ’s policy transparency
- Yen is broadly in balance assuming all 3 arrows of ‘Abenomics’ are launched successfully
- Launching all 3 arrows of ‘Abenomics’ will create positive spillovers to Asian, global economies
Big assumption underlined in there …
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Headlines via Reuters