Former Bank of Japan board member: The window for the Bank of Japan to raise interest rates is narrowing.

Former member of the Bank of Japan's policy board Sayuri Shirai stated that if the central bank wishes to further raise interest rates, it may need to take action within this year, otherwise the window of opportunity will close. Weak domestic demand in Japan is making it difficult to justify a rate hike, and if the inflation rate falls below the Bank of Japan's target of 2%, raising interest rates will be even more challenging. She said, "The Bank of Japan may want to normalize its policy within its capacity, even if it can only slightly correct the excessive depreciation of the yen. However, Japan's economy is too weak, and weak domestic demand is not compatible with a path of interest rate hikes." Although there are positive signals in Japan's wage growth, sustained inflation is suppressing household spending. The latest government data shows that private consumption remained flat from January to March. The Bank of Japan predicts that from April 2026 onward, consumer inflation will slow down to below 2% in the next fiscal year and beyond, which Shirai believes will complicate decisions to further raise interest rates. The headwinds of growth are also intensifying, with Japan facing the risk of a technical recession after the economy contracted in the first quarter, and April marking the first decline in exports to the U.S. in four months, highlighting the impact of high tariffs.