According to a former member of the Bank of Japan's policy board, the central bank is highly likely to decide on an interest rate hike during its policy meeting in April. Seiji Adachi indicated that, compared to the data-scarce March meeting, April will bring together multiple core indicators, including the final results of the "shunto" wage negotiations, the Tankan business survey, and the latest quarterly inflation outlook. These key data points will provide policymakers with solid evidence to confirm that the goal of a "virtuous cycle of wages and prices" has been achieved, thereby offering a strong empirical basis for further monetary tightening. In Adachi's policy roadmap, he predicts that Japan's interest rates will likely be raised in a step-by-step, gradual manner to around 1.25%. He emphasized that 1.25% is not only a key milestone in the current rate hike cycle but also symbolizes the formal starting point for the normalization of Japan's monetary policy—marking a definitive end to the decades-long special policy environment aimed at combating deflation. Adachi's view aligns with growing market expectations that, under the leadership of Bank of Japan Governor Kazuo Ueda, monetary policy may see action in the spring, a timeline earlier than most economists had predicted following the last rate hike in December. Regarding the interplay between political and macroeconomic factors, Adachi suggested that government intervention to block a rate hike is currently unlikely, even though Prime Minister Sanae Takaichi has traditionally been seen as a supporter of expansionary monetary policy. He noted that while some believe Takaichi, after her landslide election victory last week, might disrupt the BOJ's policy normalization process, she is unlikely to prevent a rate hike as such a move could backfire. "Takaichi appears to have become very sensitive to market dynamics," Adachi said. "If she were to tell the BOJ not to raise rates, the potential market reaction could be a depreciation of the yen." In their first meeting following Monday's election, the Prime Minister and Governor Ueda discussed economic issues and exchanged broad views but did not make specific requests. Adachi's comments come as current members of the BOJ's policy board have recently hinted that further rate hikes may be possible after December's increase, which brought the policy rate to 0.75%, its highest level in three decades. One of the most hawkish members, Naoki Tamura, suggested in a speech last week that rate adjustments could occur around springtime. A key factor for the BOJ is the progress of ongoing annual wage negotiations. Since the results of negotiations with major companies will not be finalized until March 23, the board may consider it too early to act at the next meeting ending on March 19, Adachi stated. By the time the policy board meets on April 27–28, members will have seen the wage negotiation outcomes and the latest quarterly Tankan survey on business and household confidence, released earlier in the month. Adachi noted that this meeting will also coincide with the BOJ's updated economic outlook report. Adachi served on the policy board until March of last year. During his tenure, the board was preoccupied with weighing the risk of a return to deflation, which meant the idea of raising rates faced persistent internal opposition. Since leaving his post, he has sensed a shift in the BOJ's stance on rate hikes. "The BOJ appears to have become slightly more proactive about raising rates," Adachi said, pointing to reduced emphasis on the lower bound of the estimated 1% to 2.5% neutral interest rate range. "It no longer focuses solely on the lower end of the range. This may be related to its desire to preserve room for rate adjustments in case of a future economic downturn." Adachi could not specify how much further the BOJ might raise rates after two additional hikes bringing the rate to 1.25%—a uncertainty stemming from the constraint that Japan's potential growth rate may only be around 0.5%. Notably, his forecast for the peak rate, slightly below 1.5%, is significantly lower than the median estimate of 1.5% in last month's economist survey. On Monday, a government report showed that Japan's economy grew at an annualized rate of 0.2% in the last three months of the year, well below the market consensus of 1.6%. Adachi stated that this is not surprising given Japan's economic growth potential. "Once rates return to around 1.25%, the BOJ will finally be at the starting point of normal monetary policy—that is, the end of policies aimed at addressing deflation risks," Adachi said.