The Bank of Japan is fully prepared to put an end to the world’s last negative interest rate, and April is the most likely timing for when it might do so, a former BOJ board member said.

"The BOJ is completely ready,” Makoto Sakurai said in an interview Wednesday. "They are just waiting for one last push from one or two economic data.”

April is the most likely timing for a rate hike after authorities peruse initial results of spring wage talks due in March, Sakurai said, expressing a view shared by most BOJ watchers surveyed by Bloomberg.

What may surprise market players will be the slow pace at which Japan’s central bank conducts its normalization process following its first hike since 2007. It won’t resemble what traders saw in the U.S. and Europe, the former official said.

"The BOJ will only go slowly. It’s completely different from” the Federal Reserve and European Central Bank, Sakurai said. "What Japan’s economy needs is the continuation of an appropriate level of monetary easing.”

Sakurai expects the BOJ’s terminal rate will likely be around 0.5% for its short-term rate, and the bank will probably take three or four years to get there, meaning just one or two hikes in the first 12 months.

"The market will be excited like a big party in April and May” with the first rate hike in 17 years, Sakurai said. "But that’s bound to cool down” as they realize the very gradual pace of subsequent rate increases.

Sakurai was one of nine board members under Gov. Haruhiko Kuroda from 2016 to 2021, and was seen as someone who played a leading role in indicating the consensus for BOJ policy.

In October, he raised the possibility of an end to the negative rate in the last months of 2023. Previously he correctly predicted an adjustment to the YCC program would come around fall 2022, before the bank did just that in December that year. Sakurai keeps in close contact with BOJ officials and also knows Gov. Kazuo Ueda well.

There is no need for the central bank to rush into raising rates, as there’s little risk of inflation wildly overshooting its target — unlike conditions faced by the Fed and ECB in recent years, Sakurai said. The bank also must carefully assess the potential impact of higher rates on private banks, especially regional ones, he added.

While BOJ watchers are monitoring whether Prime Minister Fumio Kishida’s ruling Liberal Democratic Party’s deepening slush-fund scandal will affect the timing for the end of the subzero rate, Sakurai said that could be a tailwind for the process. The LDP’s biggest faction, a vocal supporter of aggressive monetary easing, has been hit hardest, weakening its influence.

"The BOJ now has a free hand,” Sakurai said. "It’s really up to Gov. Ueda to decide” on when he wants to raise the rate.