IMF says Japan needs to stick with stimulus
IMF said monetary policy should be loosened further if risks to the economy materialise, warning of weak consumption that remains vulnerable to external shocks.
While the BOJ should maintain its ultra-loose policy, it should do so by focusing on capping long-term interest rates under its yield curve control policy, the IMF said.
To clarify that stance and enhance communication of its policy, the central bank should "phase out" a loose pledge to keep increasing its government bond holdings at an annual pace of 80 trillion yen ($721 billion), it said.
"The BOJ should carefully calibrate its yield curve policy, if downside risks materialise, to provide additional monetary easing," the IMF said in its annual Article 4 evaluation of Japan's economy.
IMF Deputy Managing Director David Lipton told reporters that the BOJ's new monetary policy framework was already showing some success by bringing down market volatility and stabilising the bond yield curve.
"We're comfortable with the stance of (BOJ) monetary policy. Recent changes to the monetary policy... (are) the right, useful approach," Lipton told a news conference.
"What's important is the maintenance of the approach that has been laid out and accompanying it with structural and fiscal agenda," he said. ■