International Monetary Fund: Predicts the Bank of Japan will raise interest rates twice this year and once more next year.
PANews reported on February 18th that, according to Jinshi, the International Monetary Fund (IMF) stated that Japan should avoid lowering its consumption tax to prevent exacerbating fiscal risks. In its latest statement on the conclusions of Article IV consultations with Japan, released Wednesday, the IMF stated, "The authorities should avoid lowering the consumption tax, as this non-targeted measure would erode fiscal space and exacerbate fiscal risks." The organization predicts that by 2031, interest payments on Japan's outstanding public debt will double compared to 2025, as maturing debt is refinanced at higher yields. The IMF warned, "High and persistent debt levels, coupled with a deteriorating fiscal balance, make the Japanese economy vulnerable to a range of shocks." The IMF's forecast is consistent with the Japanese government's estimates. The head of the IMF's delegation to Japan stated, "Our forecast assumes the Bank of Japan will raise interest rates twice this year and once more in 2027."
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