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The Japan Times
BOJ needs to raise policy rate to 1.5%, former S&P Global executive says
In an interview, economist Paul Sheard emphasized that the Bank of Japan (BOJ) should raise its policy interest rate to 1.5% to combat inflation exacerbated by a weak yen and higher import prices. Sheard advised the BOJ to adopt a more aggressive monetary policy, noting that Japan's longstanding concerns about deflation should not hinder necessary rate increases. He provided insights into the structural factors affecting the yen's value and criticized current investment strategies that do not adequately address the challenges posed by Japan's aging population.
MonitorConfidence: MediumShort term horizon
Published 29 Jul 2026, 06:45 UTC1 min read
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Summary
TL;DR
- Paul Sheard calls for a rate hike to 1.5% from the current 1.0%
- Concerns about inflation driven by a weak yen and import prices
- Sheard critiques Japan's strategic investment plans as lacking innovation
- Emphasizes the need for foreign workers to boost the economy
- The BOJ will hold a monetary policy meeting soon
Interesting facts
- The policy rate has not been at 1.0% for 31 years until recently
- Sheard's comments reflect a shift in economic outlook as Japan struggles with inflation
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