The Bank of Japan should start preparing for future monetary tightening by moving away from its yield control policy, the International Monetary Fund's chief economist Pierre-Olivier Gourinchas said on Tuesday.
The remarks came ahead of the BOJ's closely-watched meeting on Friday, where the board will release fresh price forecasts and debate whether to tweak its controversial yield curve control policy as inflation stays above its 2% target.
He said the IMF was encouraging Japan to "be a bit more flexible and maybe move away from the yield-curve control that it has now." BOJ officials, including governor Kazuo Ueda, have stressed the need to keep ultra-loose policy until there is more evidence inflation will sustainably hit 2% backed by strong wage growth. They have also said the BOJ was mindful of the cost of YCC such as market distortions caused by its heavy bond buying.
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