IMF Deputy Managing Director: BOJ Will Continue to Advance Monetary Policy Normalization
Taylor Wilson
IMF First Deputy Managing Director Dan Katz said Japan's recovery gives the BOJ room to keep exiting nearly three decades of ultra-low rates, with inflation still above target pointing to continued tightening. The call comes as the US and Japan jointly intervened in the yen market for the first time in fifteen years.
Why does the IMF think the BOJ will keep raising rates?
Katz's core logic is straightforward: inflation remains slightly above target, so monetary-policy normalization — gradually lifting rates from ultra-low levels back to a normal range — will continue.
This means → the BOJ's nearly thirty-year ultra-low-rate era is being systematically wound down, not paused.
He framed Japan's current moment as a "profound, long-term transition." Structural reforms launched under former PM Shinzo Abe are delivering results, making the recovery trend-driven, not a short-term bounce.
The US-Japan joint yen intervention — how rare is this?
The US and Japan jointly intervened in the yen market last week — the first coordinated move by both countries in nearly fifteen years.
US Treasury Secretary Scott Bessent said on social media that the yen is "seriously undervalued" and intervention is only part of the fix.
In plain terms = when the two largest economies step in together to prop up a currency, they're signaling the yen has fallen too far for the market to self-correct.
As of 3:17 PM London time, the yen had pulled back about 1.3% from its August 3 high, trading at 158.58 per dollar — the market is digesting the intervention's impact.
How does Katz see the BOJ's role on the exchange rate?
Asked how the central bank should support the yen, Katz offered no specific operational advice. He said he expects the BOJ to "take the necessary actions to fulfill its mandate."
This means → the IMF's position is that the BOJ's job is to do two things at once — bring inflation to target and support growth. Yen support is a byproduct of those goals, not a standalone objective.
This reflects the IMF's trust in the BOJ: no direct instructions, but an expectation it will do "what needs to be done."
What are the good and bad signals for the global economy?
The good: Katz said the global economy has shown greater-than-expected resilience, with rapid advances in AI and other technologies acting as an "important force" for growth.
The bad: global imbalances are becoming entrenched — high, persistent imbalances pose real risks of severe financial fault lines.
In plain terms = the economy overall is holding up, but trade and capital gaps between countries keep widening. If that pressure releases all at once, it won't be gradual — it will be sudden and disorderly.
Content is for reference only, not financial advice.