IMF says further Japan rate hikes should be data-driven, gradual

WASHINGTON, March 6 (Reuters) - The International Monetary Fund on Thursday said it had been supportive of the Bank of Japan's monetary policy decisions, and further hikes in interest rates should be data-driven and proceed at a gradual pace.

IMF spokesperson Julie Kozack told reporters that Japanese authorities have committed to a flexible exchange rate, a policy that has helped the economy absorb the impact of shocks.

Kozack said the IMF expected growth to strengthen in Japan this year, with inflation to converge to the Bank of Japan's 2% growth target by the end of the year.

Japan's growth slowed in 2024 due to temporary supply disruptions but the economy has strengthened since then, driven by private consumption and rising wages.

In January, the global lender projected growth of 1.1% for Japan, but would be updating that projection when it releases an updated World Economic Outlook in April, Kozack said.

She said the IMF believed recent interest rate hikes would help anchor inflation expectations at the 2% target rates, but said any further rate hikes should "continue to be data dependent and they should proceed at a gradual pace over time."

Japanese Prime Minister Shigeru Ishiba on Thursday said high tariffs imposed by U.S. President Donald Trump's administration would make investments in the United States difficult.

Almost 90% of Japanese companies expect Trump's policies to hurt business, a Reuters survey showed last month.