IMF: BoJ's over-optimism in hitting 2% inflation target has hurt its credibility

Eren Sengezer FXStreet

The Bank of Japan's (BOJ) over-optimism in hitting the 2% inflation target has damaged its credibility, the International Monetary Fund (IMF) said in its staff report, as reported by Reuters.

"The BOJ should clarify that it is not excessively focused on inflation, but that other objectives, including financial stability, also matter for monetary policy," the publication read. "The emphasis on achieving the price stability target 'as soon as possible,' together with unrealistic inflation forecasts, have been particularly problematic given limited policy space, a clogged monetary transmission, and rising financial stability costs."

USD/JPY reaction

The USD/JPY hasn't reacted to the IMF's commentary and was seen trading sideways near 109.75, where it was virtually unchanged on a daily basis.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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