Former Bank of Japan Governor Haruhiko Kuroda has proposed a rough view on Japan's neutral interest rate, suggesting that the central bank has a significant room for interest rate hikes in the process of policy normalization. Kuroda, speaking via video link at the Bund Summit in Shanghai on Friday, said the Bank of Japan's attempt to gradually approach the nominal neutral interest rate may be lower than 2%. He said that short-term nominal interest rates may be lower than 2%, perhaps around 1.5% or even lower. The neutral policy interest rate is considered to be a level of interest rates that neither restricts nor stimulates economic growth. The median expectation in the recent survey of economists showed that the Bank of Japan is expected to raise the benchmark interest rate to 1% in the current tightening cycle. In his speech on Friday, Kuroda did not explicitly state his views on the specific level to which interest rates could rise as the Bank of Japan exits decades of ultra-loose policies. However, Kuroda's speech indicates that the Bank of Japan still has a long way to go, as the key interest rate has only risen to 0.25% after the most recent rate hike.