WASHINGTON (Kyodo) The International Monetary Fund warned Japan on Wednesday against prematurely declaring an end to deflation and raising interest rates, saying there is still a "one-third chance" of a further decline in consumer prices.

In its semiannual World Economic Outlook report, the IMF urged Japan to promote fiscal reforms, including a consumption tax hike "over time," to deal with problems arising from the aging of its population.

The IMF raised its projection for Japan's economic growth in 2006, based on "solid" domestic demand.