OECD urges the Bank of Japan to gradually raise short-term interest rates

<p>Advice for the BOJ from the Organisation for Economic Cooperation and Development (OECD), the OECD 2024 report on Japan.</p><p>Says that if inflation stays around its 2% target and is accompanied by sustained wage growth:</p><ul><li>Bank of Japan should
gradually raise short-term interest rates</li><li>should make its bond
yield control policy more flexible (referring to BOJ yield curve control (YCC))<ul><li>such as by raising the 10-year bond yield target or moving to a short-term yield target</li></ul></li></ul><p> "Japan is at a turning point, with inflation more likely to
settle durably around the 2% inflation target than at any time
since its inception," </p><ul><li> "Greater flexibility in the conduct of yield curve control
and a gradual modest increase in the short-term policy interest
rate are warranted, based on projections of sustained inflation
and wage dynamics,"</li><li>warned that uncertainty around Japan's inflation
outlook was "exceptionally large."</li></ul><p>—</p><p>As we all know, BOJ Governor Kazuo Ueda has stressed the bank's resolve to keep ultra-loose policy settings intact until sustained achievement of 2% inflation, accompanied by durable wage rises, comes into sight.</p><p>Related from earlier today:</p><ul><li><a href="https://www.forexlive.com/centralbank/bank-of-japan-is-completely-ready-to-end-negative-rates-in-april-2024-ex-boj-official-20240110/" target="_blank" rel="follow" data-article-link="true">Bank of Japan "is completely ready” to end negative rates in April 2024 – ex BOJ official</a></li></ul><p>—</p><p>Bank of Japan Governor Ueda does not need advice from the OECD</p>

This article was written by Eamonn Sheridan at www.forexlive.com.