On March 19th, Keio University professor and former Bank of Japan board member Sayuri Shirai shared insights talking to CNBC’s Squawk Box on the central bank’s monetary policy, highlighting challenges posed by global uncertainty and Japan’s sluggish economy.
The below was filmed right before the BOJ announced no change in rates later that day.
Key takeaways:
BOJ Rate Hike Outlook: The Bank of Japan (BOJ) wants to raise interest rates this year but faces significant uncertainty, including tariff concerns affecting Japanese manufacturers.
Tariff Impact on Japan: New tariffs on Japanese products, including steel, automobiles, and agriculture, could negatively impact Japan’s economy, reducing expected GDP growth from 1% to a lower figure.
Weak Domestic Economy: Japan’s domestic economy remains fragile, with 2023 real GDP growth at just 0.1% and sluggish consumer spending due to high prices.
Inflation vs. BOJ Policy Dilemma: While headline inflation is at 4%, it is mainly driven by yen depreciation and rising food costs. BOJ faces a dilemma—if inflation falls below 2% due to yen appreciation, it will be harder to justify a rate hike.
