The International Monetary Fund (IMF) recognized that the weaker yen is a positive factor for Japan’s economy, emphasizing that a weaker currency benefits Japan by promoting exports. Nada Choueiri, head of the IMF’s mission to Japan, stressed in an interview on Friday that the benefits from increased export earnings will outweigh the rise in import costs due to the weaker yen.
Japan is an export-driven economy, so we believe a weaker yen will stimulate overall economic growth. Nagaori said the Japanese authorities are committed to maintaining a flexible exchange rate regime, and suggested that despite the recent depreciation of the yen against the dollar, Japan is in no hurry to intervene in the foreign exchange market. He pointed out that This decline is due to expectations that the difference in interest rates between Japan and the U.S. will continue, and Japanese officials are concerned about the impact of rising import prices on households and retailers.
Regarding monetary policy, Mr. Hidetoshi Naga advised the Bank of Japan (BOJ) to carefully and systematically adjust interest rates, taking into account the balanced risks to inflation and the high degree of uncertainty in economic forecasts. He advocated a data-driven approach and gradualism in raising interest rates.
The Bank of Japan is expected to keep short-term interest rates unchanged at 0.25% at its two-day policy meeting next week. The central bank forecast that inflation will remain stable at around 2% until March 2027. After ending its negative interest rate policy in March and raising interest rates in July, the Bank of Japan signaled progress towards sustainably achieving its inflation target.
Bank of Japan Governor Kazuo Ueda said the central bank will continue to raise interest rates in line with the economic outlook, but will carefully consider global uncertainties such as the US economic outlook when determining the timing of the next rate hike. .
Reuters contributed to this article.
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