WASHINGTON: International Monetary Fund official Ranil Salgado has called on the Bank of Japan to take a flexible approach to monetary policy under new Governor Kazuo Ueda.

Speaking to reporters at the IMF headquarters in Washington on Friday, Salgado, head of the IMF’s mission to Japan, noted that he sees “risks in both directions” in terms of Japan’s price outlook.

Salgado discussed the BOJ’s monetary policy measures, including its yield curve control, as its new leadership team is tasked with reviewing the bank’s unorthodox policy, which has been in place for 10 years, while European and US central banks have hiked interest rates.

Salgado said that the BOJ should continue to keep in place powerful easing measures to maintain negative short-term interest rates, given relatively weak inflationary pressure in Japan.

At the same time, “we think it’s important that there’s more flexibility in long-term yields,” in order to improve financial market functions, he added.

With the possibility in mind of Japan facing higher inflation in the future, Salgado said that the flexibility in long-term interest rates will help prevent drastic monetary policy changes by the BOJ.

JIJI Press