International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas said on Thursday, it is “too early for the Bank of Japan (BoJ) to tighten monetary policy as re-anchoring inflation expectations to its 2% target will take time.

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BoJ must stand ready to tighten monetary policy if inflation remains too elevated.

BoJ will likely find it very difficult to tighten monetary policy while maintaining yield curve control.

It is probably safer for BoJ to first move away from control of long-term yield, then raise short-term rate when need arises to tighten policy.