Japan's Rate Hike Can't Fix What Politics Broke

The Bank of Japan recently raised its interest rate to 1.25%, the highest level in 31 years, in an attempt to counter the downward pressure on the yen and stabilize the country's exchange rate.

This move has pushed Japan into a difficult monetary dilemma: leaving rates unchanged could prolong the downward pressure on the yen and add to external economic pressures, while raising rates risks placing further strain on an already fragile domestic economy and a heavily indebted government.

The core of Japan's current economic crisis lies in its severely weakened economic fundamentals, a crisis artificially created by the Takaichi administration's misguided China policy.