The Long Normalization | Japan from the lost decades to a rate-hiking cycle
Japan is, in 2026, the one major economy tightening into a world that is trying to hold still. The equity index sits near 66,000 after needing thirty-four years merely to reclaim its 1989 peak; its policy rate is the highest since the mid-1990s and still climbing; and an avowed disciple of Abenomics now governs while the central bank dismantles Abenomics' monetary core. This is not a break with Japan's past. It is its conclusion.
Everything in this piece resolves into one question. Japan has tried to leave the floor twice before and been dragged back. What is different this time is not the central bank's resolve — it flinched before precisely because it was resolute — but the presence, for the first time, of a domestic wage-price engine underneath the exit. That is the genuine break with the past.
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