IMF clear on policies needed in Japan – MUFG

By FXStreet Derek Halpenny, European Head of GMR at MUFG, suggests that the comments yesterday by Luc Everaert, Japan’s mission chief at the IMF pointed to the IMF wanting Japan to focus on domestic demand policies that help to lift inflation rather than policies that might lift inflation through a weaker yen.

Key Quotes

“Through fiscal and monetary policy measures Japan should adopt policies to lift economic growth. It is clear that the BOJ will be under intense pressure to adopt some additional easing at its meeting on 28th April. Our Tokyo colleagues believe the end of April may be too soon for further action given the last action was only at the end of January and that the BOJ will also wait for clarity on fiscal policy.

There is certainly a danger this could spark another bout of yen strength in the period following the policy meeting. Perhaps more time is required before a large easing package is announced – there was certainly a downbeat assessment today by BOJ Board Member Harada, who admitted that “prices don’t appear to be rising” and added that any increased downside risks to inflation would mean more easing.

The good news is that the broader financial market …read more

Source:: FX Street