I have been thinking about the recent inflation trajectory in Japan in the light of constant calls from mainstream economists (including a bevy of private bank economists who work for institutions that benefit from interest rate hikes) for the Bank of Japan to hike rates. What is driving CPI movements? What has been the impact of the yen depreciation? How responsive is the yen to interest rate changes anyway? Are the increasing yen-denominated import prices being passed on to Japanese consumers? Why doesn’t the Takaichi Administration realise that in the face of supply-side inflation the remedy is not to expand fiscal policy? How responsive are exports to the yen depreciation? All these questions are popping up continually in the financial media at the moment. I haven’t time today to answer all these questions in detail. But here is a start.