IMF sees scope for Bank of Japan to keep raising rates
By Leika Kihara and Howard Schneider
JACKSON HOLE, Wyoming, Aug 23 (Reuters) -The Bank of Japan can raise interest rates gradually as heightening inflation expectations leave further scope to normalise its ultra-loose monetary policy, the International Monetary Fund said on Friday.
The speed of further rate increases will be "very data-dependent," as the BOJ will look at the pace at which inflation, wage growth and inflation expectations heighten in normalising policy, said IMF chief economist Pierre-Olivier Gourinchas.
Gourinchas said Japan's inflation is higher than 2% and inflation expectations have started to move towards, or "maybe even a little bit above" the BOJ's 2% target.
As a result, the BOJ is normalising the extremely loose monetary policy it has had for decades, which is "certainly something that we think is a good development for Japan," he told Reuters in an interview on the sidelines of the annual economic symposium in Jackson Hole, Wyoming.
"Certainly in our assessment, there is scope for further normalisation of monetary policy going forward, and policy rates to increase gradually for some time," he said.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July in landmark steps away from a decade-long radical stimulus program.
BOJ Governor Kazuo Ueda has signaled the bank's readiness to keep raising interest rates if inflation makes progress toward durably meeting its 2% target, as it projects.
While Japan's economic growth will slow in 2024 from the fiscal stimulus-driven expansion last year, what is important for the BOJ is not just economic activity but inflation, Gourinchas said.
Unlike other central banks that focused on taming inflation expectations, the BOJ had to pull them up from multiple decades of too-low levels, he said.
"What the BOJ is trying to engineer is a realignment of inflation expectations," Gourinchas said.
"We're expecting that as inflation expectations remain stable at their new level close to 2%, the BOJ will start normalising policy rates," he said.
The BOJ's surprise July rate increase and Ueda's hawkish signal jolted financial markets in August, forcing his deputy to offer dovish reassurances that no hikes would come until markets stabilise.
Speaking in parliament on Friday, Governor Ueda reaffirmed the BOJ's readiness to keep raising rates but with a close eye on the economic fallout from still-unstable markets.
Gourinchas said the recent market turbulence was due to a mix of factors including prospects of higher Japanese interest rates, and weak U.S. jobs data that fueled expectations of faster-than-expected rate cuts by the Federal Reserve.
Thin market trading during the August holiday season, coupled with a massive unwinding of the yen carry trade, also heightened market volatility, he said.
"I think the market overreacted," he said. "I think a lot of this has been resolved, but we could see other episodes of market volatility as markets are ... in a little bit of an uncharted territory" with many central banks starting to ease policy, while the BOJ begins to raise rates, he said.
Reporting by Leika Kihara and Howard Schneider; Editing by Rod Nickel
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.