JP

Japan is navigating the difficult transition away from negative interest rates and Yield Curve Control. With a policy rate finally reaching 0.25%, the carry trade dynamics are shifting globally. The Debt/Gold Z-score for Japan remains uniquely high due to the sheer scale of the BOJ's balance sheet. Persistent yen weakness is boosting the exports-to-GDP ratio but at the cost of significantly higher import-driven inflation. Japan's massive holdings of foreign assets continue to provide a crucial global liquidity buffer.