Japan slipped into a technical recession. The Bank of Japan has to juggle supporting the yen and fragile growth

Japan's central bank is expected to exit its negative interest rate regime this spring, though sluggish growth will limit its ability to alleviate depreciation pressure on the yen, according to a former Bank of Japan board member.

BOJ Governor Kazuo Ueda is under pressure to stem yen depreciation driven by the divergence between high U.S. interest rates and Japan's ultra easy policy. Yet, he is also constricted by high inflation that BOJ policymakers still deem unsustainable, even as it crimped domestic demand and tipped the economy into a technical recession. That surprise contraction meant Japan's economy is now the world's fourth largest, falling behind Germany.

"It's a serious challenge and dilemma," Sayuri Shirai, an economics professor at Keio University in Tokyo, told CNBC's "Squawk Box Asia" on Thursday. She previously served as a member of BOJ policy board from 2011 to 2016, helping to make monetary policy decisions.

"However, I think BOJ is likely to take some policy change, including [the] removal of negative interest rates this spring, because I think they worry about side effects," she said.

The yen retreated to around 150 to the dollar this week after U.S. inflation data came in higher than expected, dousing hopes of a quicker Federal Reserve rate cut. The yen's chronic weakness has diminished not only the purchasing power of consumers in Japan, but also the value of the country's exports.

"I think they want to take this opportunity to do some adjustments, and also more market participants anticipate that BOJ will do some normalization this spring. So regardless of whether BOJ is able to achieve 2% in stable manner, I think BOJ will take some policy change this spring," Shirai added.

Even if BOJ policymakers deem