OECD urges caution on BOJ rate moves

The warning followed the BoJ's move last Friday to raise interest rates above zero for the first time in six years.

In its Economic Survey of Japan, published Thursday, the OECD said Japan needed to focus on tackling its budget deficit and called on the BoJ to cooperate with the government by maintaining a relaxed position of monetary policy.

"The priority is to achieve a primary budget surplus and stop the run-up in the government budget deficit, which is the highest in the world," said Angel Gurria, OECD secretary-general. The central bank should "be cautious in raising interest rates" further, the report said.

The report warned that the impact of higher oil prices on Japan's trading partners could hurt trade and put downward pressure on prices.