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
