IMF Japan Affairs Director: We are assuming in our forecast that the Bank of Japan will raise interest rates twice this year and once again in 2027.

The head of the Japan office of the International Monetary Fund stated that there is no reasonable level for the exchange rate. The yen exchange rate has been fluctuating, and the Japanese authorities are committed to implementing a flexible exchange rate system. The yen exchange rate is determined by market forces, and we believe that there is no so-called reasonable level for the nominal exchange rate of the yen. If we see the yen consistently depreciating over a longer period of time, we should expect to see a stronger transmission effect of higher import prices on overall inflation. In our forecast, we assume that the Bank of Japan will raise interest rates twice this year and once more in 2027.