The IMF weighs in on their assessment of the Japanese economy
- Monetary policy also needs clear forward guidance
- Clear forward guidance and improved framework would lift inflation expectations
- Near-term fiscal tightening should be avoided
- 2018 real exchange rate is broadly consistent with medium-term fundamentals
- Abenomics remains appropriate, but reinvigorated policies are needed
- Japan's underlying growth is to remain solid, notwithstanding planned sales tax hike
- Calls for gradual sales tax hike at least to 15%
- Says BOJ should maintain long-term interest rate target
- Says BOJ could remove guidance on amount of JGB purchases
- Downside risks to Japan have increased
- Weaker global demand and uncertainty on trade could undermine growth
Nothing that really stands out in my view but it seems like even the IMF is a little bit tired of Japan's ultra easing policies and lack of forward guidance with regards to monetary policy. The thing to watch out for in the year ahead will be the proposed sales tax hike that will come into effect next year.
Depending on how the Japanese economy withstands it, that'll make for an interesting situation for the government and the Bank of Japan.
