By Leika Kihara
WASHINGTON, April 13 (Reuters) - The Bank of Japan can
make an eventual exit from ultra-loose monetary policy "more
seamless and less disruptive" by allowing long-term interest
rates to move more flexibly, a senior International Monetary
Fund (IMF) said on Thursday.
"What we have emphasised is the need for flexibility in
(Japanese) yields," IMF's Asia and Pacific Department Director
Krishna Srinivasan told a news conference.
Srinivasan said the IMF saw both upside and downside risks
to Japan's inflation, with this year's wage negotiations between
companies and unions putting near-term pressure on inflation.
In the medium-term perspective, inflation is likely to slow
back below the central bank's 2% target, he added.
Under yield curve control (YCC), the BOJ caps the 10-year
bond yield around 0% as part of efforts to reflate growth and
sustainably achieve its 2% inflation target.
Rising inflation and global bond yields have forced the BOJ
to ramp up bond buying to defend the yield cap, drawing
increased criticism for distorting market pricing and
heightening speculation it may soon end YCC under new Governor
Kazuo Ueda.
Ueda, who is visiting Washington for his debut IMF meetings,
has said the BOJ must maintain YCC for the time being to achieve
a durable rise in wages and inflation.
(Reporting by Leika Kihara; Editing by Chizu Nomiyama)
Messaging: leika.kihara.reuters.com@reuters.net))
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