In December, the Japanese financial market really welcomed the most critical turning point in nearly 30 years. The Bank of Japan raised the benchmark interest rate to 0.75%, a level not seen in 30 years, and Finance Minister Katayama also sent the strongest signal for foreign exchange market intervention.

However, this time the market's answer did not follow the government's script. The yen's short-term volatility has intensified, but unfortunately, it still cannot withstand the weakness. It once surged to the 157 level against the US dollar and is still hovering at a high level after a pullback. Even more exaggerated is the bond market, where the 10-year government bond yield has forcefully broken through 2%, reaching a new high in nearly 25 years.

This seemingly contradictory market situation, in simple terms, is the Bank of Japan repeating the old path of the 1990s. What's the difference? In the 1990s, Japan had a severe deflation, but they had a solid foundation — the wealth accumulated in the 70s and 80s was still there. But now it's different. On one hand, they are quarreling with neighboring countries, and on the other hand, the policy signals are unclear, the interest rate differential structure cannot be changed, there is a serious mismatch between fiscal and monetary policies, and the scale of debt remains high. #以太坊行情解读
The era of easy money has ended. Japan, which has crawled out of the quagmire of deflation, now faces the true dilemma of stagflation—monetary fiscalization and fiscal deficit, which is the core pain point.