Japan's consumption tax hike is likely to dent economic growth this quarter and some analysts believe it may shock the country into a recession and possibly even a fiscal crisis.
"It is definitely a severe negative shock for Japan's economy," Takuji Okubo, chief economist at Japan Macro Advisors, told CNBC Monday.
He expects the economy will contract 3 percent in the April-to-June quarter from the previous quarter, with the consumption tax hike to 8 percent from 5 percent, effective April 1, possibly pushing inflation for the month to nearly 4 percent.
In response to the slowdown, Okubo expects the Bank of Japan (BOJ) will apply "multi-dimensional" easing, buying equity exchange traded funds (ETFs) and Japanese government bonds (JGBs) to flatten the yield curve.
"The BOJ will try everything they can," he said, but noted he doesn't expect the moves will be effective.
"When people see the BOJ has tried everything they can and they just cannot do anything more to salvage this economy, that's when the JGB yield will pop," he said.