Senior IMF official warns of tit-for-tat tariffs, China property sector, yen intervention

Senior IMF official:

• China’s property sector problems have not been addressed in a comprehensive way, leading to consumer confidence plummeting.
• The risk of deflation in China has increased, which hurts Asian countries that must compete with China’s falling export prices.
• Any kind of political uncertainty has a bearing on sentiment and economic activity, when asked about Japan’s general election outcome.
• Since the Bank of Japan is normalizing monetary policy and interest rates are rising, it’s even more important for Japan to start fiscal consolidation in earnest.
• Any new initiative or fiscal support that Japan deploys should be targeted and funded within the budget, instead of by issuing more debt.
• Any further rate hikes by the Bank of Japan should be gradual and data-dependent.
• Japan is fully committed to a flexible exchange rate regime, when asked about authorities’ recent remarks describing yen moves as ‘one-sided and sharp.’

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Despite it being the IMF its hard to argue with any of those points!

This article was written by Eamonn Sheridan at www.forexlive.com.