Letter from Nikkei Asia's editor: Japan's tale of two economies

Hello from Tokyo. The yen remains weak despite the Bank of Japan's historic decision to raise the interest rate for the first time in 17 years. This is because Japanese rates are still low compared with other countries. With the BOJ maintaining its accommodative monetary policy, the expectation appears to be that the situation won't change much until the U.S. starts cutting rates.

This view seems even more plausible when closely examining how the BOJ board members made the rate-hike decision. During the policy meeting, one board member said that "even if the BOJ ends the negative rate policy, it would need to emphasize its cautious stance, as the economy is not in a state where rapid interest rate hikes are necessary," according to the summary of opinions released Thursday by the central bank.

Former BOJ chief Masaaki Shirakawa explains in his latest commentary for Nikkei Asia why he thinks calling the BOJ's decision "historic" is an exaggeration. Even though it is known that Shirakawa has been critical of the bank's ultraloose monetary policy, he offers an intriguing analysis of the latest policy changes by BOJ Gov. Kazuo Ueda.

So what does the BOJ's policy decision actually mean for the Japanese economy? This week's Big Story, supported by interviews with people across a range of sectors, examines whether the nation can truly break out of the "lost decades" and achieve strong growth.

Japan's economic fortunes will also determine the fate of Prime Minister Fumio Kishida, who is suffering from record-low approval ratings in the wake of the ruling party's political funds scandal. At a press conference Thursday, Kishida stressed: "We have a once-in-a-generation opportunity for a complete break from deflation. Achieving a