The International Monetary Fund (IMF) has urged the Bank of Japan (BOJ) to continue raising interest rates, despite the Middle East war posing "significant new risks" to Japan's economic outlook. This comes amid expectations that the BOJ will raise interest rates as soon as April due to mounting inflationary pressure from the conflict-induced spike in oil prices and higher import costs due to the weak yen. The IMF's executive board commended Japan's strong economic resilience to global shocks and agreed that gradual rate hikes toward neutral should continue. The central bank has expressed its readiness to keep raising rates on the expectation that underlying inflation will converge to its 2% target in 2027.