Paul Sheard, former vice chairman of S&P Global and a prominent economist, has indicated that amid historically weak yen levels, the Bank of Japan needs to raise its policy rate from the current 1.0% to 1.5% to address inflation driven by higher import prices. Sheard noted that the Bank of Japan has long been wary of the risk of returning to deflation through premature rate hikes, and said it should implement two quarter-point rate increases to bring the rate to around 1.5%, and consider further adjustments if high inflation persists. He also cited structural factors behind the yen's weakness beyond the Japan-US interest rate differential, including the decline in nuclear power generation since the Great East Japan Earthquake and the impact of rising crude oil prices.