IMF chief economist says BOJ rate hike is good development for Japan

The Bank of Japan could continue to raise interest rates gradually at a “data-dependent” pace, IMF chief economist Pierre-Olivier Gourinchas told Reuters in an interview at the annual Jackson Hole Economic Symposium on Friday:

• Inflation is above the bank’s 2% target.
• Inflation expectations have started to move “perhaps even slightly above” this target.
• “The Bank of Japan’s beginning to normalize monetary policy is certainly something we think is a good development for Japan.”

Gorinchas also gave his opinion on market volatility:

• “I think the market overreacted.”
• “…we may see further episodes of market volatility” due to interest rate cuts by several central banks as the Bank of Japan begins to raise rates

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I don’t know how much attention the Bank of Japan will pay to his views. But I suspect it won’t.

He’s right about more volatility ahead at least. With Fed Chair Powell confirming a September rate cut:

And the Bank of Japan’s interest rate hike, and there’s more to come.