TOKYO—The Bank of Japan should consider further steps to make its ultra-easy monetary policy more sustainable, such as steepening the yield curve by targeting a shorter maturity than the current 10-year yield, an International Monetary Fund executive said. Such a move would be on top of steps the central bank took in March last year to mitigate the side-effects of prolonged easing, such as allowing 10-year yields to move more widely around its 0 percent target. The BOJ must clearly communicate that the move would be aimed at enhancing the effect of its ultra-easy policy, not at withdrawing stimulus, said Odd Per Brekk, deputy director of the IMF’s Asia and Pacific Department. “Unlike in other advanced economies, we see inflation in Japan over the next few years moving in the 1 percent range, which is below the BOJ’s target,” he said. “This means that the BOJ should continue its accommodative …
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