Economist recommends Bank of Japan raise interest rates to 1.5 percent

Paul Sheard, a former senior executive at S&P Global, has said the Bank of Japan should raise its key interest rate to 1.5 percent. He made this recommendation in an interview with Jiji Press on July 27, 2026.

Sheard suggested two separate increases of 0.25 percentage points each to reach that level. He said higher import costs and a weak yen have pushed prices up, so the central bank needs to act. Japan's central bank has kept rates very low for many years to stop prices from falling. Sheard believes the BOJ can now be bolder. He also said the bank should watch conditions carefully after the increases and raise rates further if inflation stays high. Sheard has followed Japanese monetary policy since 1995.