IMF chief economist says Bank of Japan rate hikes a good development for Japan


IMF chief economist Pierre-Olivier Gourinchas spoke in an interview with Reuters at the Jackson Hole annual economic symposium on Friday. Saud the BoJ can continue to raise rates gradually, a ‘data dependent’ pace:

  • inflation is higher than the Bank’s 2% target
  • inflation expectations have started to move “maybe even a little bit above” that target
  • BOJ’s beginning to normalise monetary policy is “certainly something that we think is a good development for Japan”

Gourinchas also weighed in with his two cents on the market volatility:

  • “I think the market overreacted,”
  • “… we could see other episodes of market volatility” due to rate cuts from many central banks while the BOJ begins to raise rates

I don’t know how much attention the Bank of Japan will give his opinions. I suspect not much.

He’s right about more volatility to come at least. With Federal Reserve Chair Powell confirming a September rate cut:

And the BoJ hiking, plenty more to come.