WASHINGTON \u2013 Japan\u2019s rising long-term interest rates are \u201ca sign of a healthy economy\u201d resulting from the country\u2019s exit from long-standing deflation, senior International Monetary Fund (IMF) official Tobias Adrian has said.<\/p>\n
In a recent interview, Adrian, director of the IMF\u2019s Monetary and Capital Markets Department, described the current monetary policy of the Bank of Japan (BOJ) as \u201cappropriate\u201d to keep inflation around its 2% target.<\/p>\n
Speaking on the sidelines of this week\u2019s IMF-World Bank annual spring meetings in Washington, Adrian said the IMF believes \u201cthe monetary policy of the Bank of Japan is appropriate,\u201d referring to the BOJ\u2019s gradual raising of interest rates toward a neutral level that neither stimulates nor restrains the economy. He added that the process of policy normalization is \u201con track.\u201d<\/p>\n
In the Tokyo bond market, the benchmark yield on 10-year government bonds hit a 27-year high on Monday, partly due to inflation concerns stemming from a surge in crude oil prices following U.S.-Israel military strikes against Iran.<\/p>\n
\u201cFor many, many years, policymakers in Japan have been trying to get inflation to come back towards 2%,\u201d Adrian said.<\/p>\n
\u201cIn some sense, interest rates are rising for good reasons, right? It\u2019s because the economy is growing strongly and inflation is back,\u201d he added. \u201cI think that\u2019s actually something to welcome.\u201d<\/p>\n
Adrian also said that although Japan\u2019s interest rates have risen, they remain low compared with those of other countries. He expressed the view that the yen will continue to play \u201can important role\u201d in global markets.<\/p>\n
In its Global Financial Stability Report released Tuesday, the IMF said that an unwinding of carry trades, in which investors borrow in low-interest yen and invest in higher-yield currencies, \u201ccould affect global capital flows.\u201d<\/p>\n
If Japanese investors, major buyers of U.S. and eurozone government bonds, shift funds back home, it could ripple through bond markets around the world, raising borrowing costs and putting pressure on public finances in advanced economies, the report said.<\/p>\n
Regarding Japan\u2019s high level of public debt, Adrian observed that given the BOJ\u2019s large holdings of government bonds, the amount held by the private sector is relatively small. He expressed the view that the country\u2019s high debt level is \u201cquite manageable\u201d on balance.<\/p>\n
In the foreign exchange market, the yen has been weakening against the dollar amid safe-haven dollar buying owing to rising geopolitical tensions. Adrian said that while authorities may be advised to intervene in cases of disorderly market conditions, floating exchange rates are generally \u201ca useful shock absorber.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"WASHINGTON \u2013 Japan\u2019s rising long-term interest rates are \u201ca sign of a healthy economy\u201d resulting from the country\u2019s…\n","protected":false},"author":2,"featured_media":41135,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[1713,2726,191,189,825,188,190],"class_list":["post-41134","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-boj","tag-bonds","tag-economy","tag-economy-of-japan","tag-imf","tag-japans-economy","tag-japanese-economy"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/41134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=41134"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/41134\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/41135"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=41134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=41134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=41134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}