The Bank of Japan is trapped.

If it raises rates aggressively to defend the yen, it increases government debt-service costs and inflicts losses on banks, insurers, pension funds, and other institutions holding government bonds.

If it keeps rates too low, capital continues to move away from the yen, the currency declines, and imported inflation accelerates.

If it resumes massive bond purchases, it confirms that the debt cannot be financed naturally and further undermines confidence in the currency.

https://www.armstrongeconomics.com/international-news/japan/japan-is-the-first-domino-i...