TechFlow news, May 21 — According to Jinshi Data, former Bank of Japan (BOJ) committee member Sayuri Shirai said that if the central bank wishes to raise interest rates further, it may need to act within this year, otherwise the window of opportunity will close. Weak domestic demand in Japan undermines the case for rate hikes, and if inflation falls below the BOJ's 2% target, raising rates would become even more difficult. She stated: "The BOJ may want to push forward with policy normalization while it still can, even if only slightly correcting excessive yen depreciation. However, the Japanese economy is too weak, and fragile domestic demand is incompatible with a rate hike path." Although wage growth shows positive signals, persistent inflation continues to suppress household spending. Latest government data shows private consumption was flat from January to March. The central bank expects consumer inflation to slow below 2% in the fiscal year starting April 2026 and beyond, which Shirai believes will complicate further rate hike decisions. Downside risks to growth are also intensifying—after Japan's economy contracted in the first quarter, it now faces the risk of a technical recession, and April's exports to the U.S. fell for the first time in four months, highlighting the impact of high tariffs.
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