OECD warns BoJ against raising interest rates

0 Comments | AFP, May, 2007

PARIS (AFP) — The OECD on Thursday upgraded its outlook for the Japanese economy but warned the central bank not to raise interest rates again until the country has got fully over deflation.

Japan's longest post-war economic expansion remains on track, led by the strength of the corporate sector, although sluggish wages have limited the positive impact on consumer spending, the Paris-based think tank said.

"The further tightening of the labour market is projected to boost wage gains during 2007-08, leading to faster growth in private consumption and pushing inflation into positive territory," it predicted.

Japan's gross domestic product (GDP) will grow 2.4 percent this year and 2.1 percent next year after a 2.2 percent expansion in 2006, the Organisation for...