The International Monetary Fund (IMF) has rarely endorsed the normalization of Japan’s monetary policy, saying that if inflation exceeds expectations, the Bank of Japan may need to raise interest rates faster. BOJ Governor Kazuo Ueda also said during the IMF’s annual meetings that underlying inflation is close to 2% and that the BOJ “cannot tolerate” it rising further, and will continue to raise its policy rate. Market bets on a BOJ rate hike in December have climbed to around 75%, with the current policy rate of 1.25% at a 31-year high. If the BOJ continues tightening, the yen may gain support, while the repatriation of Japanese funds could also disrupt global bond markets. $USDJPY

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