BOJ may need to tighten faster if inflation beats forecast, IMF says

By Leika Kihara BANGKOK, Oct 17 (Reuters) The Bank of Japan is doing the right thing by normalising monetary policy and may need to raise interest rates faster if inflation rises more than expected, a senior International Monetary Fund official told Reuters. Japan must also clarify how it plans to fund ​its big spending plans and lay out a medium-term fiscal framework to ease market concerns about ‌fiscal risks, said Krishna Srinivasan, director of the IMF s Asia and Pacific Department. I would say that they are doing the right thing at this point, Srinivasan said on the BOJ s efforts to lift its policy rate towards levels deemed neutral to the economy. If inflation rises faster than expected, you have to start tightening faster because you don t want inflation expectations to get un-anchored. It s data dependent, ‌he said ​in an interview on Friday. The remarks came ahead of the BOJ s key ⁠policy meeting later this month, when ⁠it could keep rates steady but drop hawkish hints