IMF Suggests BOJ Ready For Tightening!

<p>&nbsp;If previously the International Monetary Fund (IMF) supported the loose policy stance of the Bank of Japan (BOJ), but it is now beginning to change its view!</p><p><br /></p><p>In a statement IMF chief economist Pierre-Olivier Gourinchas suggested the BOJ to be flexible and possibly move away from the yield curve control program.</p><p><br /></p><p>He said that the Japanese authorities can remain accommodative, but it needs to be prepared to face the need to start tightening.</p><p><br /></p><p>The proposal comes ahead of the BOJ's policy decision on Friday, where it is widely expected to keep its dovish policy stance unchanged.</p><p><br /></p><p>In its latest economic projections, the IMF projects Japan's economy to grow 1.4% this year, before slowing to 1% in 2024.</p><p><br /></p><p><br /></p><p>In addition, global growth prospects are projected to increase to 3% in 2023, up slightly from the initial forecast it made in April of 2.8%.</p><p><br /></p><p>Despite the increase, however, the IMF still warns of persistent challenges that weaken the medium-term outlook.</p><p><br /></p><p>He added that inflation is seen to be decreasing and severe pressure in the banking sector has subsided, but the balance of risks facing the global economy remains downward and credit conditions are tightening.</p><p><br /></p><p>Meanwhile, the IMF predicts global headline inflation will fall to 6.8% this year from 8.7% in 2022, declining to 5.2% in 2024.</p><p><br /></p><p>However, core inflation is expected to decline gradually, reaching 6.0% in 2023 from 6.5% the previous year and decreasing to 4.27% from 4.24% next year.</p>