Boj Will Keep Raising Rates Imf

last updated on

Boj Will Keep Raising Rates Imf

Imf Believes Boj Will Keep Raising Rates

According to the IMF ( International Monetary Fund), the Bank of Japan is highly likely to keep raising the rates. They added that there is scope for the central bank to bring some normality to its ultra-loose monetary policy.

The IMF chief economist added that any rate hikes from the BoJ will be data-dependent. In other words, the central bank will look at inflation, wage growth, & other factors to decide on the rate hikes.

Inflation To Stay Near 2%

IMF officials commented on how the inflation in Japan is above 2%, and forecasts show that it will rise further. So, there's a good chance that the inflation might even cross the target range set by the BoJ.

March 2024 was the historic moment when BoJ ended its policy of negative interest rates with a rate hike of 0.25%. Since then, the bank has introduced more hikes and continues to take measures towards policy normalization.

As the BoJ has raised the rates, the economic growth of Japan will likely take a hit. Another factor which hints at this possibility is the bank's decision to cut down its stimulus and bond-buying program.

It is a very interesting situation in Japan; The rest of the world is trying to cool down the inflation while the BoJ wants to lift it higher.

For the year 2024, the inflation expectations in Japan will likely be near 2%. This was shared by the chief economist of the IMF.

They also added that the July rate hike from BoJ was a surprise. Also, the bank chief gave hawkish signals in August which also aligns with the bank's overall policy.

Last Friday, governor BoJ made it clear that the bank is ready to raise the rates. However, he added that the officials will keep a close eye on the market situation.

The observations from the IMF are in line with the market players who also believe that BoJ has more rate hikes in store for the rest of 2024.

Trending Stories