Japan’s Economic Outlook: Navigating Massive Fiscal Expansion, Inflation Pressures, and Monetary Tightening

In this paper, we discuss:

• How Takaichi’s massive investment plan aims to revive Japan’s growth;
• Why rising debt and bond yields raise fiscal sustainability concerns;
• How inflation and a weak yen strengthen the case for BoJ tightening;
• Why fiscal expansion is complicating the BoJ’s monetary policy;
• Why a September rate hike remains likely despite weaker growth.

Download PDF: Japan – September 2026