And households are hating it. Part of the problem is that most of the inflation from which Japan is suffering comes from abroad. It wasn’t the BOJ’s ultraloose policies that defeated deflation — it was Vladimir Putin.

Bank of Japan Governor Kazuo Ueda said on Wednesday geopolitical tensions could cause a sudden reversal of cross-border capital flows.

The Bank of Japan will keep tapering its government bond purchases despite recent rises in yields, deputy governor Shinichi Uchida said on Friday, stressing its huge bond holdings continue to exert a strong stimulus effect on the economy.

Bank of Japan Governor Kazuo Ueda on Thursday warned of "very strong" uncertainty on the global economic outlook that required vigilance in setting monetary policy.

Although the Bank of Japan is raising borrowing costs and Japanese Government Bond yields are the highest in 15 years, "real" inflation-adjusted rates in the world's fourth-largest economy are actually negative and the lowest in years.

Investors in Japan's government bond market are getting a glimpse of life without heavy intervention by the Bank of Japan, which is showing little sign of reverting to a hands-on approach despite the recent steady rise in long-term interest rates.

Speculators have mounted their biggest ever wager that the Japanese yen will continue to rise as they position for further Bank of Japan interest rate hikes, an abrupt reversal from huge bets against the currency last year.

Data showed core inflation in Japan rose to 3.2% in January, up from 3% in December, exceeding forecasts of 3.1%. Headline inflation also increased to 4%, up from 3.6%, marking the highest level in two years.

"The 10-year JGB yield rose to above 1.4% on expectations that the Bank of Japan would raise interest rates further. Today it got an additional boost from the sell-off of German bonds," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

Japan's output gap in the October-December quarter turned positive for the first time in six quarters, the Cabinet Office estimated on Tuesday.

The yield on Japan’s 10-year note climbed 6.5 basis points, while the 30-year yield rose 10.5 basis points to 2.51%, the highest since 2008. The 40-year yield jumped to a level unseen since its inception in 2007.