The International Monetary Fund has urged the Bank of Japan to consider steps to ease the strains caused by its ultra-loose policy on financial institutions, such as targeting a shorter maturity for its long-term bond yield target.
IMF insists Fiscal policies can complement the BOJ’s efforts to protect the economy from overseas risks, suggesting that Tokyo should not shy away from ramping up fiscal spending in the near-term despite its huge public debt.
While the central bank ought to maintain its massive stimulus program, it must also find ways to mitigate the rising cost of prolonged easing and make its policy sustainable as inflation remains distant from its 2% target, the IMF said.
