A former member of the Bank of Japan's policy board, Sayuri Shirai, indicated that the central bank may keep interest rates unchanged this month, as underlying inflation pressures excluding special factors have not intensified significantly. This view stands in stark contrast to prevailing market expectations.
Speaking at an event in Tokyo, Shirai noted that while many believe the BOJ, having postponed a rate hike in April, might act in June, she does not anticipate a policy adjustment at this upcoming meeting.
Her perspective diverges from the pricing in interest rate swap markets. Traders are currently assigning approximately a 77% probability of a rate hike by the BOJ on June 16th, with the odds rising to around 92% for a move by July 31st.
Shirai suggested the central bank could first assess the impact of the government's supplementary budget and economic growth plans before making a decision on raising rates. Shirai is currently a professor of economics at Keio University.
She added that the BOJ might implement one rate hike within the year, but inflationary pressures have not escalated to a point that necessitates urgent action.
Shirai served as a policy board member at the Bank of Japan from April 2011 to March 2016. She cast a dissenting vote against the introduction of the negative interest rate policy in January 2016.
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