I don’t think anyone would want to the be in the BOJ’s shoes right now.
On the one hand, inflation pressures are giving policymakers every reason to keep raising interest rates
But on the other hand, Japan’s economy is already dealing with expensive energy imports and a weak yen – not to mention a very uncertain global outlook. If that isn’t problematic enough, then here’s the kicker. The inflation pressures that are building aren’t exactly the kind that the BOJ has been hoping for.
The central bank has spent decades in trying to nurture a healthier cycle of rising wages, stronger consumer spending, and sustainable price increases. For the most part, those efforts went nowhere. And it took a global economic reset from the Covid pandemic to finally give Japan a get-out-of-jail-free card.