Former Bank of Japan member: The Bank of Japan's interest rate hike window is shrinking

According to Mars Finance News, Sayuri Shirai, a former member of the Bank of Japan's committee, stated that if the bank wishes to further raise interest rates, it may need to take action within this year, otherwise the window of opportunity will close. Japan's weak domestic demand provides insufficient reasons for rate hikes, and if the inflation rate falls below the central bank's 2% target, rate increases will become more difficult. She said: "The Bank of Japan may want to promote policy normalization when possible, even if it can only slightly correct the excessive depreciation of the yen. However, Japan's economy is too weak, and its fragile domestic demand is incompatible with the path of interest rate hikes." Despite signs of wage growth in Japan, persistent inflation continues to suppress household spending. The latest government data shows that private consumption remained flat from January to March. The central bank predicts that consumer inflation will slow to below 2% in the next fiscal year starting from April 2026 and beyond, which Shirai believes will complicate further rate hike decisions. Headwinds to growth are also intensifying, with Japan facing the risk of a technical recession after its economy contracted in the first quarter, and exports to the US declining for the first time in four months in April, highlighting the impact of high tariffs. (Jinshi)