Upside risks to inflation have materialised in past year IMF
Japan should tighten fiscal policy, wind down monetary stimulus
End to negative rates likely to be smooth IMF Gopinath
BOJ should gradually raise shortterm rates IMF
IMF criticises energy subsidies, planned income tax cut

TOKYO, Feb 9 Reuters The Bank of Japan should consider ending its yield curve control and massive asset purchases now, then gradually raise shortterm interest rates, the IMF said on Friday, as markets ramp up bets on a nearterm turn in the central bank39;s ultraeasy policy.

As Japan39;s economy continues to recover, domestic demand is replacing rising costs as the main driver of inflation with the output gap closing and labour shortages intensifying, the International Monetary Fund said.

The BOJ has been appropriately cautious, given Japan39;s history of deflation and mixed signals from recent data. That said, upside risks to inflation have materialized in the past year, the global lender said.

In the near term, the focus should shift to tighten fiscal policy and wind down unconventional monetary policy, while maintaining financial stability, the IMF said in a statement after its annual policy consultation with Japan.

With inflation having exceeded 2 for well over a year, the BOJ has been laying the groundwork for ending a complex stimulus programme comprising a massive assetbuying programme dubbed quantitative and qualitative easing QQE, a negative shortterm interest rate and…