Government Debt and Monetary Policy Perspectives in Japan

Amid rising global inflation, Japan, which has long struggled with deflation, is now witnessing increasing prices. Inflation and the appointment of a new Bank of Japan governor in April 2023 bring the future of its monetary policy into question. Changes in monetary policy could significantly impact the economy, particularly public finances, given Japan's high debt. The Bank of Japan must carefully observe market reactions to changes in monetary policy, while the government should aim to improve its fiscal situation. In the meantime, Japan must carefully consider the effectiveness and potential drawbacks of monetary and fiscal policies.