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> BOJ Gov. Haruhiko Kuroda reiterated on Thursday a pledge to maintain monetary stimulus to support a fragile economy facing still weak inflation and reeling from the COVID downturn.

Anyone have any insight into Japan’s thinking on their monetary policy right now?

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> Anyone have any insight into Japan’s thinking on their monetary policy right now?

The BoJ has been throwing money at the economy for decades with little activity/inflation (and some bouts of deflation):

* https://fred.stlouisfed.org/graph/?g=PA7P

Japan has been in the doldrums since (at least) 1998:

* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...

* https://en.wikipedia.org/wiki/Secular_stagnation

https://bigthink.com/wp-content/uploads/2022/02/GDPDebt2021_...

I’ve always found this infographic shocking. I don’t know how they can get out from under that and they keep going directly head on into it faster.

The inflation does make all that debt cheaper, so that's one way.

Yields are positive and growing.

https://tradingeconomics.com/japan/government-bond-yield

What will happen when the interest on this debt gets too expensive? Further inflation and/or severe government austerity.

Indeed. But there’s a reason why shorting Japanese government bonds is known as the “widowmaker” trade.

Giant majority of that is internal debt, so inflation is actually helping them.

Bank of Japan owns over half that debt.

Take out that debt and Japan's debt to GDP ratio falls below the US's. Now factor in how Bank of Japan's active surppresion of interest rates occurs by buying debt. If Bank of Japan keeps the 10 year at 0.25% then the net government debt will continue it's free fall.

The Bank of Japan is 55% (100% voting interest) owned by the government. I’ve seen this same scheme before in the Alameda/FTX news…

Those two situations are very different

Roughly half of the US's national debt is owned by the government too.

That figure includes the social security fund which is not included in the japanese figure. The social security fund is a liability, while the bank of Japan is fully a government asset.

I think it helps to start with what you think “getting out from under that” means. Why do you think it’s a problem for Japan have this much debt to GDP?

I think Japan, having failed to transition to an economy driven by internal consumption, is going to devalue its currency until the country is once again cost competitive as an exporter.

I would love to know. Most other central banks are raising rates and tightening policy, especially the US which probably affects the Japanese currency the most.

From my naive view, the BoJ can't keep depressing rates without leading to huge currency weakening and consequently the cost of imported goods can create a lot of inflation.

Inflation like that can quickly go out of control so imo it won't be long until they start seeing 10+% or higher like some other places.

Other central banks are other central banks. Their monetary policy does not affect Japan in the same ways the actions of the BoJ do.

Weakening currency is (indirectly) more or less the point. Lack of monetary expansion may very well not be the only reason for their economic stagnation, but it was a hindrance, so this turn is overall very good news; there's certainly a possibility they'll overdo it, but that remains to be seen.

Not super well informed on Japanese markets, but my understanding is that their bond markets are extremely dysfunctional (they even have had days where the BOJ is the only buyer on the market!) and this poses considerable financial risk in the system. This is the main factor why they keep their loose monetary policy as far as I can tell.

https://archive.ph/4zbuj

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