The Bank of Japan has really gone all out this time. The more than ten-year "negative interest rate era" is about to come to an end, and a series of recent signals have made it very clear: the window for cheap yen is closing.

This is not just a simple rate hike; fundamentally, it is a reshuffling of the global liquidity landscape. Raising interest rates to 0.75% may seem moderate, but don’t be fooled by the surface number— even at this level, after subtracting actual inflation, interest rates are still negative. The truly warning sign is the expectation of "continuous monthly rate hikes," which changes the logic of global capital flows.

Over the past decade, yen depreciation has created the world's cheapest borrowing costs. Institutions have borrowed yen to invest in U.S. Treasuries, high-yield bonds, and even cryptocurrencies—this strategy has long become a mainstream approach worldwide. Once the cost of borrowing yen continues to rise, these positions will be forced to unwind, with trillions of yen in funds being reallocated. The first to be cut will undoubtedly be the most volatile and risky asset classes, with the crypto market being the first in line.

More troubling is the chain reaction in the bond market. The yield curve control of Japanese government bonds has been pushed to its limit. Once this line of defense is relaxed, the entire bond market will experience intense volatility, affecting everything from corporate bonds to emerging market assets. Buckle up, it won’t be peaceful ahead.

The most worth pondering is the real consideration behind the central bank’s actions. They are willing to risk an economic recession to raise interest rates, which indicates that the inflation pressure they see is far more fierce than official data suggests. Moving forward, two data points to watch are: whether spring wage growth can break through 5%, and whether Japan’s core inflation will hit new highs. These two indicators will determine the pace of the central bank’s next moves.