The decision by the Bank of Japan (BoJ) last week to set an explicit 2% inflation target to bring the country's economy out of more than two decades of near- constant deflation has driven far smaller changes in the domestic inflation market than the move at the end of 2011 to double the country's sales tax.

On Monday, the breakeven point on a two-year inflation swap stood at 100 basis points – just 4bp higher than before the BoJ's move. Partially this is explained by a 20bp increase since early