The sting in the tail of Japan’s lost decades - Financial Times

What the report says

Financial Times reports that pressure is building in Japan’s bond market, framing it as a “sting in the tail” of the country’s long post-bubble stagnation. According to the FT headline and available summary, Tokyo is facing fewer easy policy options as investors test the sustainability of a policy mix that for years relied on ultra-low interest rates, heavy public borrowing and central bank support.

The article text was not available in the supplied material, so details of the FT’s specific evidence, market moves or policy assessments cannot be independently summarized here. The core development, as reported by the FT, is that bond-market strain is becoming a more important constraint for Japanese authorities at a time when earlier tools used to cushion weak growth and deflation are less straightforward to deploy.

For context, Japan’s “lost decades” generally refers to the period after the early-1990s asset-price collapse, when growth was subdued and deflationary pressure persisted. The Bank of Japan maintained exceptionally loose monetary policy for years, while government debt rose as fiscal stimulus and social spending helped support the economy. More recently, inflation and wage pressures have complicated the case for keeping rates extremely low.

The issue matters because Japanese government bonds are central to domestic finance and closely watched globally. If borrowing costs continue to rise, policymakers may face harder trade-offs between supporting growth, containing inflation, maintaining financial stability and managing the fiscal burden. Any adjustment by Tokyo or the Bank of Japan can also influence currency markets and international bond investors.