The International Monetary Fund said the Bank of Japan should avoid a premature exit from monetary easing and outline conditions for raising its negative interest rate in order to improve communications.
"Any changes to monetary policy settings will need to be well communicated to facilitate smoother transitions and protect financial stability,” the fund said Friday at the conclusion of its latest Article IV consultation report on Japan. Abrupt policy framework change would impose risks on the economy, it said, as the central bank headed for its first governorship change in a decade.
Following the report’s release, the IMF mission chief to Japan Ranil Salgado clarified that the IMF isn’t recommending any telegraphing in advance for a shift in "yield curve control," as that could lead to a buildup in speculative pressures.
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