IMF recommends BOJ to continue gradual rate hikes
The International Monetary Fund recommended on Friday that the Bank of Japan continue to gradually raise its policy rate toward a neutral level to bring down underlying inflation.
The BOJ should "continue to move the policy rate toward a neutral setting" to meet the central bank's 2 % inflation target, the IMF's Executive Board said after concluding an annual review of the Japanese economy.
Board directors agreed that the BOJ is "appropriately withdrawing monetary accommodation."
Amid significant uncertainty over external conditions, the directors emphasised their support for "a flexible, well-communicated and data-dependent approach."
Regarding the Japanese government's plan to reduce the consumption tax, the directors stressed that "any measures should be targeted to vulnerable households and firms, temporary and budget neutral," so as not to increase a fiscal deficit.
