IMF suggests BOJ allow more flexibility in long-term yields

Annual statement says policy change would help 'better manage inflation risks'

The IMF urged the Bank of Japan to improve its communication. (Nikkei montage/Getty Images/Reuters/Akira Kodaka)

KENTARO IWAMOTO, Nikkei staff writer

January 26, 2023 18:32 JST

Updated on January 27, 2023 00:32 JST

TOKYO -- The International Monetary Fund on Thursday suggested that the Bank of Japan could allow more flexibility in 10-year bond yields, a move that would involve policy changes for the central bank.

In its conclusion to an annual report on Japan's economy, the IMF said the BOJ's accommodative policy remains "appropriate." But it noted there is "exceptionally high uncertainty around baseline inflation projections with risks tilted to the upside," referring to factors such as the delayed effects of the yen's depreciation, Japan's border reopening and fiscal support.