International Monetary Fund (IMF) on Japan and the BoJ, after its annual policy consultation with Japan:

  • Upside risks to inflation have materialised in past year
  • Japan should tighten fiscal policy, wind down monetary stimulus
  • BOJ should gradually raise short-term rates
  • IMF criticises energy subsidies, planned income tax cut

International Monetary Fund First Deputy Managing Director Gita Gopinath adds:

  • If BOJ moves gradually with clear communication, hikes in short-term rate should not lead to very large global spillovers
  • BOJ can smoothly end negative rates given market perception that real borrowing costs will remain very low
  • Number, speed of rate hikes should be data dependent
IMF's Gopinath
IMF's Gopinath