International Monetary Fund Chief Economist Olivier Blanchard said today that there was a need for a “dramatic change” in Japan’s monetary policy to generate positive inflation and that the monetary policy followed by the Bank of Japan is “appropriate.”
Blanchard told a news conference in Washington today that the hope is that the “nominal depreciation is offset by low inflation, which will not change the real exchange rate.”
“Overall the yen has depreciated by a large amount over the recent past,” Blanchard said. “We think that the monetary policy followed by the BOJ is appropriate.”
Earlier, Blanchard said of Japan that “given the very high level of public debt, embarking on the fiscal stimulus in the absence of a medium-run fiscal consolidation plan is risky.”
The news conference was held to present the IMF’s latest global economic outlook.