IMF says Japan should keep raising interest rates if justified by inflation data Reuters

By David Lawder

WASHINGTON (Reuters) – The International Monetary Fund said on Thursday that the Bank of Japan should remain data-dependent and continue to gradually raise monetary policy rates in line with inflation data, adding that the central bank was on track to bring back the price level the increases. annual target of 2%.

“Our advice is for the BOJ to continue to be data-driven and gradually increase the policy rate over its policy horizon if inflation forecasts show that this is the right way to go,” IMF spokeswoman Julie Kozack said in a statement. -a regular press briefing. .

Japan’s new Prime Minister Shigeru Ishiba said on Wednesday that Japan is not in an environment that calls for a further rate hike, a remark that markets interpreted as reducing the chances of a near-term hike. Ishiba also promised new tax measures to protect many households from the impact of higher prices.

Kozack said Japan’s economy continues to grow, but broad price increases are keeping headline inflation above the BOJ’s 2 percent target.

“Our assessment is that the economy remains on track to reach the 2 percent target sustainably over the medium term,” Kozack said, adding that Japan’s fiscal policy should focus on “growth-friendly” fiscal consolidation to help rebuild shock absorbers and secure debt. durability.

This fiscal consolidation could be supported by both revenue and spending measures and would help maintain market confidence in Japan’s debt sustainability, “which of course is critical to Japan’s growth,” she added.