MF article 4 policy proposal to Japan:
- Japan’s economic recovery is expected to strengthen in 2022 but balance of risks tilted to downside
- Japan must maintain policy fiscal support to vulnerable households near-term, but continue to scale down pandemic-relief steps as recovery takes hold
- looking ahead, Japan’s fiscal policy should be ‘nimble and flexible’
- longer run, Japan must consider taking steps for fiscal consolidation such as raising consumption tax rate, hike taxes on property and capital income
- BOJ must maintain accommodative monetary policy with inflation projected to remain below 2% target in medium term
Senior IMF official:
- BOJ should continue current easy policy as inflation likely to move in 1% range over next few years
- Japan likely to see inflation momentum build up this year as consumption rebounds
- now is not time to shift yield target to shorter maturity, which becomes option if BOJ needs to ramp up stimulus
- BOJ should consider further steps to make policy framework sustainable, such as targeting yield with shorter maturity than current 10-year yield
Nothing of much insight from the IMF here. (more…)
We expect the situation in the energy markets to remain unchanged. Nevertheless, in this scenario, natural gas prices stay elevated for a longer period of time as the markets continue to be tight, at least until the spring of 2023. In the event of a harsh winter, either in Europe or in Asia or both, pressure would increase on the LNG markets. However, these extra price gains will probably disappear as soon as the cold period is over.
