What’s more, the growing gap between interest rates in Japan and elsewhere was pushing down the yen’s value, piling even more stress on the country’s highly import-dependent economy. That made some analysts speculate that the Bank of Japan would soon be forced to raise interest rates.
Which brings us up to December, when Mr. Kuroda suddenly announced that the bank would double the ceiling on 10-year bond yields, allowing them to fluctuate between plus and minus 0.5 percent, and effectively raising interest rates.
To many investors, the decision seemed like the first tentative step toward even bigger rate increases. As bond yields have jumped, the bank has had to spend heavily to defend its rate target.
Which raises the question, how much longer can the Bank of Japan stick to its guns?
The answer depends on a number of factors, including the performance of the global economy and whether the central bank feels it has finally reached its targets for wage growth and inflation, said Toshitaka Sekine, a professor of economics at Hitotsubashi University.
Most experts believe that the process of unwinding Mr. Kuroda’s monetary easing policy, when it happens, will take years. It is certain to be complicated: Many Japanese borrowers have become accustomed to cheap money — variable interest rates are common, for example — and a hasty retreat could strain households and firms alike.
It could also be painful for global markets that have come to take Japan’s loose monetary policy for granted. Years of anemic growth and a decade of super-low interest rates have pushed many Japanese investors to seek higher returns abroad, increasing their already prominent role in global credit markets.
Although unlikely, a rapid reversal by the Bank of Japan “could generate some hard-to-anticipate shock waves around the world,” said Brad Setser, a fellow at the Council on Foreign Relations and an expert on global trade and capital flows. “In the worst-case scenario, rapid rises in long-term Japanese rates push up long-term interest rates globally.”