BOJ Has Room for Further Normalization, IMF Says

The International Monetary Fund's (IMF) first deputy managing director, Dan Katz, believes that the Bank of Japan has room to continue normalizing monetary policy. According to Katz, structural reforms introduced under former Prime Minister Shinzo Abe are now showing results after years of implementation.

The BOJ has been moving out of its low interest rate regime, which was in place for almost three decades, and is starting to normalize policy, Katz said. He expects the central bank to take necessary steps to meet its inflation mandate while supporting economic growth.

Katz also mentioned that inflation is still modestly above target, so he would expect a continued normalization of monetary policy by the BOJ. This comes after the US and Japan joined forces in their first joint intervention in the yen in 15 years last week.