The return of inflation prompted by the Bank of Japan's bold monetary easing may not be unambiguously positive for all sectors of the economy. Consumer spending will be weaker than otherwise and any pick-up in investment may need to be complemented by structural reforms. However, it is difficult to see any solution to Japan's fiscal problems that does not involve a sustained period of much higher inflation, even if this means that the Bank of Japan will have to work even harder to keep the government's borrowing costs down.
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