JACKSON HOLE, Wyoming –
The Bank of Japan may gradually raise interest rates as rising inflation expectations provide more room to normalize ultra-loose monetary policy, the International Monetary Fund said on Friday.
The speed of further rate hikes will be “heavily data-driven” as the BOJ will look at the pace at which inflation, wage growth and inflation expectations pick up as it normalises policy, said Pierre-Olivier Gourinchas, the IMF’s chief economist.
Gourinchas said inflation in Japan is above 2% and inflation expectations are starting to approach or “maybe even slightly above” the BOJ’s 2% target.
