The Bank of Japan raised interest rates today, and many believe it could flood the market with TRILLIONS of dollars, causing global assets to plummet.

But the numbers tell a very different story.

Let's look at the facts. The Bank of Japan (BoJ) moved away from negative interest rates in 2024 and is now close to 0.75%, with the market projecting something between 1.25% and 1.50% by 2026.

This is no surprise.

This trajectory has been priced in for months.

If this scenario were truly explosive, the first place to show stress would be the exchange rate.

But the USD/JPY remains above 150, near decade highs.

No abrupt appreciation of the yen. No need to panic.

Now for the key point.

For years, Japan has financed the world via carry trade (taking on debt in JPY at 0% interest and investing in USD, receiving 4%+).

If the carry trade were being dismantled, the JPY would be appreciating rapidly.

This simply isn't happening.

The market doesn't unwind trillions in silence.

Another overlooked fact: Japanese inflation has been above 3% since 2022. This is nothing new. It has already peaked at 4%. Companies, wages, and expectations have already adjusted.

This is not a new inflationary shock.

Furthermore, inflation is part of the solution.

After decades of near-zero nominal growth, inflation of 2%–3% is what allows for:

• nominal GDP growth • gradual debt dilution • monetary normalization Deflation never solved the Japanese problem.

Speaking of debt: Yes, Japan's public debt is enormous, above 230% of GDP.

But: • more than 90% is domestic • Japan maintains a positive current account balance of ~4% of GDP

This allows time and flexibility.

What if something gets out of control?

The BoJ still has the biggest emergency button on the planet.

It can buy back JGBs immediately.

It's done it before. The market knows this.

That's why there's no stress on the curve.

Moreover, the Japanese economy has failed for 20 years. So this inflation is very welcome to them.

Summary in numbers: • Interest rates rising gradually and priced in • Inflation above 3% for 3 years • USDJPY showing no sign of panic • Carry trade still active • BoJ with intact tools The real risk is not Japan. It's the unexpected.

And that, for now, hasn't materialized.