The Iran crisis has caused a surge in Japan's bond yields and could complicate the Bank of Japan's rate outlook, potentially increasing energy prices and weakening the yen, raising the prospect of imported inflation. The BOJ raised its key rate in December and indicated further increases are on the way as it seeks to normalise monetary policy after a decade-long stimulus. However, an extended conflict with Iran could significantly impact Japan's economy, potentially leading to a delay in raising rates. Some analysts argue that an extended crisis would cause a wider economic impact than an increase in inflation.