Is the Bank of Japan about to take serious action? An insider reveals that the pace of interest rate hikes may be faster than the market expects.

Honestly, the Bank of Japan is really in a tough spot right now. On one hand, they need to raise rates to combat inflation; on the other hand, government debt is piling up—raising rates would cause debt costs to soar; not raising them means inflation continues to erode purchasing power. Even more painfully, even if they do raise rates, the real interest rate on the yen remains negative. The gap with Western policies is clear. Relying on rate hikes to reverse the yen’s depreciation? It’s not that simple.

But the real impact on global markets is the key. Japan is the last major economy still practicing ultra-loose monetary policy. Once they tighten, yen liquidity will shrink immediately. Those trades that borrow yen to arbitrage global risk assets? They might face margin calls, triggering a chain reaction that could affect many regions.

Key dates to watch:
- **January 22-23 meeting**: Likely to stay on hold
- **April 27-28 meeting**: The real rate hike window
- **USD/JPY at 160**: A psychological threshold, don’t underestimate it
- Spring wage negotiations, Japanese government bond yields—these are all indicators

Next week, the Bank of Japan will release its quarterly economic and inflation outlook report. That document is worth paying close attention to. The yen exchange rate has already become a lever for their policy, and any shift will influence the global market.