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IMF: BOJ Can See Through Inflation Shock from Iran War
IMF's View on Japan's Inflation Outlook
The International Monetary Fund (IMF), through remarks by its Japan mission chief Rahul Anand on April 20, stated that the Bank of Japan (BOJ) can flexibly respond to inflationary pressures from the Middle East conflict. Anand suggested that while rising oil prices due to the conflict might temporarily push up prices, the secondary effects on Japan's core inflation and wages would be more moderate compared to other nations.
BOJ's Rate Hikes and Economic Growth Forecast
The IMF emphasized that even if headline inflation temporarily spikes, the BOJ has room to look through it and resume monetary easing at a pace similar to a successful baseline scenario. This assessment is based on the BOJ's capacity to foresee the inflationary shock differently from many other central banks. However, Anand added that uncertainty regarding the intensity and duration of the war poses risks to growth and inflation outlooks, necessitating the BOJ's data-driven and flexible policymaking.
The IMF projects Japan's inflation rate to converge to the central bank's 2% target by the end of 2027. Furthermore, it anticipates the BOJ will implement three more policy rate hikes, increasing it from the current 0.75% to 1.5% by mid to late next year. While Japan's economic growth is forecasted to slow to 0.7% in 2026 and 0.6% in 2027 from 1.2% in 2025, the IMF acknowledged the resilience of the Japanese economy.
*Source: arabnews.jp (2026-04-15)*
