Market confidence in Japan's budding economic recovery could be undercut by a change in the Bank of Japan's credit policy, an International Monetary Fund report released Friday says.
The IMF issued the warning in its annual assessment on Japan's economy. The paper was endorsed by IMF board directors Thursday, one day before the BOJ decided to end its 18-month-long "zero-interest-rate" policy.
The macroeconomic policy support and structural reforms in place for the past 21/2 years have been instrumental in bringing about an economic recovery in Japan that "appears to be finally underway," the report says.
But IMF directors cautioned the BOJ against moving away from its ultraeasy interest-rate policy, citing a range of indicators suggesting that "a still significant degree of economic slack remains in Japan."