IMF Asia states that the Bank of Japan is very appropriately continuing to conduct accommodative monetary policy as inflation has yet to pick up significantly in Japan.

The following are comments coming from IMF's Gukde Wolf, the Deputy Director of Asa and Pacific. 

  • Asian region faces a stagflationary outlook with growth being lower than previously expected and inflation being higher.
  • The larger-than-expected slowdown in china due to prolonged or more widespread lockdowns, a longer-than-expected slump in the property market, constitutes to be a significant risk for Asia
  • Monetary tightening will be needed in most countries, with speed of tightening depending on domestic inflation developments and external pressures.
  • Despite recent uptick, inflation remains subdued in Japan, allowing BoJ to be more accommodative than the Fed and ECB.
  • Imports become more expensive for Japan with weak yen, but exports also increase and offsets the impact.
  • We do see scope for Japan to take support for households in very targeted matter to mitigate impact from weak yen.

There has been no reaction to the comments in the market, but the yen is firm in the Tokyo open, printing a high of 127.55 so far vs the greenback. 

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