Japan hits its inflation target after 13 years, Binance loses $6.3bn, and US tariffs fail their own test

Thirteen years is a long time to wait for a number. Japan set its 2% inflation target in 2013 under Governor Kuroda, who then launched one of the most aggressive money-printing programmes in central-bank history to get there. The idea behind inflation targeting is that if a central bank announces a credible goal and backs it with action, households and firms will expect prices to rise at that rate, set wages accordingly, and the expectation itself becomes self-fulfilling. Japan's problem was the opposite: decades of deflation, where prices fell year after year, had made people expect prices to keep falling, so they delayed spending, which kept demand low, which kept prices low. Breaking that loop took thirteen years.

The BOJ held rates today even though the target is met, and that decision is worth examining. Raising rates now would strengthen the yen, making Japanese exports more expensive abroad and imports cheaper at home, which would cool the very inflation the BOJ spent so long trying to create. The BOJ is also watching whether this inflation is driven by genuine domestic demand, people spending more because they feel richer, or by import costs that could reverse. One month of data at target is not proof of a permanent shift. But every meeting where the BOJ holds while inflation sits at 2% is a meeting where the pressure to act grows. If it does raise rates, the yen carry trade, where investors borrow cheap yen to buy higher-yielding assets elsewhere, unwinds, and that is a global market event, not just a Japanese one.

The attribution to North Korea matters more than the number. Pyongyang has built what amounts to a state-run cyber-theft operation, using it to get around the international sanctions, restrictions on trade and finance imposed by the UN and the US, that are meant to stop it funding missile and nuclear development. The mechanism is straightforward: hack an exchange, convert the stolen crypto into harder-to-trace assets, and use the proceeds to buy components or pay for programmes that no bank would touch. The UN Panel of Experts estimated North Korea stole over $3 billion in crypto between 2017 and 2023. This single theft, if confirmed, would roughly double that total overnight.

What I find genuinely interesting is the regulatory question this forces open. Crypto exchanges have long argued that decentralisation, the fact that no single government controls the network, makes them hard to regulate. But Binance is a centralised exchange: it holds customer funds, it can freeze them, and it did freeze $4.4 billion within hours. That is not a decentralised system behaving like one. It is a financial intermediary behaving like a bank, which means the argument against bank-style regulation gets harder to make. If the US or EU moves to require exchanges to hold capital against theft losses, or to report suspicious flows in real time, the cost of running a crypto exchange rises sharply, and smaller platforms may not survive it. That is the regulatory risk the market is pricing, not just the stolen coins.

The standard economic argument against using tariffs to close a trade deficit runs like this. A trade deficit means a country is buying more from the rest of the world than it is selling, and that gap is financed by foreign investors putting money into the country. The size of the deficit is therefore determined by the gap between domestic saving and domestic investment, not by the tariff rate. If Americans save less than they invest, they will run a deficit regardless of the tariff level, because the money has to come from somewhere. Tariffs can shift which countries the US buys from, but they cannot close the gap unless they change the saving-investment balance, and there is no evidence the Trump tariffs did that.

The report's timing matters because it arrives alongside a Q3 GDP print of 3.4%, which looks strong. But buried in that number is a September PCE inflation reading of 3.7%, well above the Fed's 2% target. Tariffs contribute to that by raising the price of imported goods directly, and by reducing competition for domestic producers, who can then charge more. So the policy has produced higher prices for American consumers without delivering the deficit reduction it promised. The obvious pushback is that the tariffs were also about national security and supply-chain resilience, not just the deficit number. That is half right: there is a legitimate case for protecting certain industries. But that is a different argument from the one that was actually made, and a good Paper 1 essay would insist on holding the policy to its stated objective.