IMF Chief Economist Pierre-Olivier Gourinchas shared his views on Japan’s economy highlighting that the risks related to inflationary pressures likely lean towards the upside. He urged BoJ to start preparing for increasing interest rates.
Addressing Japan’s monetary stance, Gourinchas stated, “Our advice for Japanese authorities there is that right now, monetary policy can remain accommodative, but it needs to prepare itself for the need to maybe start hiking.” Furthermore, he suggested that Japan should consider flexibility in its monetary policy, “maybe move away from the yield-curve control that it has now.”
In its updated World Economic Outlook report, IMF projected a 1.4% expansion for Japan’s economy in 2023, up from a 1.0% rise last year, primarily driven by boost in consumption as pandemic restrictions are lifted. However, growth is anticipated to slow to 1.0% in 2024 as the impact of past stimulus measures wanes.
