*Japan is attempting something unprecedented: normalizing monetary policy after 30 years of emergency measures, while simultaneously grappling with massive government debt, a weak currency, persistent inflation, and a political leader who ideologically prefers easy money.

For Western investors, the key points are:

Short term: This week's interest rate hike is largely priced in and shouldn't cause major disruption on its own.

Medium term: Watch the yen. If it strengthens sharply against the dollar, new carry trade unwinds could put pressure on risk assets once again.

Long term: Japan's fiscal situation (high debt + rising interest rates + fiscal expansion) is a slow-moving structural risk that could eventually become very important.*