IMF expects gradual BOJ rate hike towards neutral setting

What happened: The IMF said the Bank of Japan will likely raise interest rates gradually toward a neutral setting, even as Japanese growth is projected to slow. Key numbers: Japan growth projected at 0.7 per cent in 2026 and 0.7 per cent in 2027, after 1.2 per cent last year. Why it matters: The IMF view aligns the BOJ with other central banks facing inflationary pressure. It said central banks may need to raise nominal rates if inflation expectations heighten, and that temporary currency intervention is an option when moves are disorderly.

The IMF said the Bank of Japan will likely raise interest rates gradually toward a neutral setting, even as Japanese growth is projected to slow.

The IMF view aligns the BOJ with other central banks facing inflationary pressure. It said central banks may need to raise nominal rates if inflation expectations heighten, and that temporary currency intervention is an option when moves are disorderly.