Nada Shueiri, head of the International Monetary Fund’s Japan mission, said on the 19th that the Bank of Japan should proceed with interest rate hikes cautiously as some indicators of inflation expectations remain below 2%. The picture shows the main office of the Bank of Japan. Picture taken in March (2024 Reuters/Kim Kyung-Hoon)
[ワシントン １９日 ロイター] – Nada Shueiri, head of the International Monetary Fund’s Japan mission, said on the 19th that the Bank of Japan should proceed with interest rate hikes cautiously as some indicators of inflation expectations remain below 2%.
In an interview with Reuters on the sidelines of the IMF and World Bank spring meetings, Xueiri said the weaker yen was having a positive effect on Japan’s economic growth.
When asked if the recent sharp depreciation of the Yen justified the intervention of the Japanese authorities, he said, “I am convinced that flexible exchange rates are useful for the world economy.”
“I am confident that all the G7 countries, including Japan, are committed to flexible exchange rate regimes and understand the importance of flexible exchange rates.”
Japan’s consumption is expected to firm up in the second half of the year, and “very strong” wage growth is expected to trickle down to small and medium-sized enterprises, he said.
The inflation rate is expected to reach the Bank of Japan’s target of 2% in 2026 in a sustainable manner, and as a result, the Bank of Japan has room to raise interest rates, but given the various risks associated with the economic outlook, is difficult to decide when to raise interest rates He said the pace will depend on future data.
Risk factors include the impact of global division and geopolitical tensions on Japan’s exports, as well as uncertainty about domestic consumption.
“We fully support the Bank of Japan’s approach of moving forward in stages as we analyze the data,” he said, adding that growth and inflation risks are balanced, so “it is very important to be gradual.”
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