The Bank of Japan's recent radical shift in monetary policy that targets an inflation rate of 2 percent in the next two years could back fire and spark a crisis in the country's bond market, according to one expert.
"If Japan succeeds with its 2 percent inflation target, interest rates will rise at some point and they just need to reach 2.8 percent for the interest on government debt to equal government revenues," James Gruber, author of "Asia Confidential" said, noting that interest on government debt takes up 25 percent of government revenues currently.
"The bond market will revolt well before it reaches that point though," Gruber, who was formerly a fund manager, added.
The BOJ, which has traditionally adopted a cautious approach, shocked markets at its last meeting on April 4 when it said it would pump $1.4 trillion in to the economy to meet a 2 percent inflation target in around two years.
(Read More: After 'Shock and Awe,' What Next From the BOJ?)
The Japanese government has enjoyed paying a low rate of interest on its debt for many years because sovereign bond yields have remained compressed in the face of deflation, which has plagued the economy for the past two decades. However, rising prices could significantly increase the interest payment burden for the government as bond holders demand higher yields.