IMF warns Japan against over-reliance on monetary policy

JAPAN was warned yesterday by the International Monetary Fund not to rely too heavily on monetary policy to underpin its economic recovery, at risk of courting possible financial sector problems and asset inflation while also pushing the yen down to levels where this could damage other countries.

The warning came at the end of the so-called Article IV consultations in Tokyo between senior IMF officials and leading government officials to examine progress so far with the system of Abenomics promoted by Prime Minister Shinzo Abe and to gauge prospects for the future.

It coincided with the publication of official data showing sharp falls in Japanese household spending and industrial production in April following the hiking of the national consumption tax at the beginning of the month. Consumer price inflation meanwhile moved higher.