Japan has seen sustained inflation since 2008, rising wages
Bank of Japan governor Kazuo Ueda a Governors, International Monetary Fund (IMF) and World Bank 2024, USA, October 23, 2024 2024 2024 2024 Country 2024 2024 year country
Kaylee Greenlee Beal | Reuters
The Bank of Japan has raised interest rates by as much as 25 times since 2008, the highest level since 2008.
The move is in line with expectations from a survey by CNBC, here Most economists predicted a hike.
Boj In his testimony It revealed that the decision was an 8-1 split, toyoaki nakamura increasing the odds.
Nakamura said the central bank would only pinch policy once the rise in referees’ earnings, which was removed from reports resulting from the next monetary policy meeting, was confirmed.
Following the decision, Japanese yen The dollar gained 0.6% to trade at 155.12, the country’s benchmark Nikkei 225 The stock index rose marginally.
The yield on 10-year Japanese government bonds rose 2.5% to 1.23%.
The Bank of Japan has long said there is a “virtuous period” in which higher wages are needed to increase prices in order to raise rates.
Before the meeting, a large number of officials, including Governor Kazuo Ueda and Deputy Governor Rozozo Himino, expressed the desire of the Central Bank to increase prices.
Focus
The BoJ will closely monitor the Shunto wage negotiations and hopes to see “strong wage hikes” in fiscal 2025, Himino said in a speech to business leaders on Jan. 14.
In Friday’s statement, the central bank said in this year’s annual spring wage management wage negotiations that wages continued to rise steadily, with multiple views of firms saying, “Improved,” “solid wages due to improved” corporate profits and a tight labor market.
The head of the Confederation of Japanese Trade Unions – Rengo – said that the annual payment this year should be more than 5.1% last year, as real wages continue to fall. Reuters reported.
President Tomoko Yoshino said in Rengo’s “Shunto” wage negotiations this year, at least a 5% increase, at least a 6% increase to raise at least 6%, and at least a 6% increase, with workers from larger companies narrowed the contraction with workers.
The BoJ noted that wages continued to rise, with core inflation rising gradually to 2%.
The CHI numbers were released earlier on Friday Headline inflation in December 2023 was the highest since January 2023. Core inflation rose to a 16-month high of 3%.
Opening the headline inflation rate there was a probability of about 2.5% For the fiscal year ending March 2026, as updated import prices stem from depreciation of new.
More price hikes?
In a Jan. 21 note, Vincent Chung, portfolio manager for T. Rowe’s price-diversified fixed-income bond strategy, said going forward, the rate hike, a “gradually gradual pace of growth, potentially brings the policy rate to 1% by the end of the year – until.
It added that the policy rate could be higher than 1%, as it is closer to the lower end of Boj’s neutral rate range.
BoJ Board Member Naoki Tamura in September neutral rate said “It would be at least 1 percent,” despite the BoJ’s official neutral rate forecast.
Chung noted that Japanese officials have noted that the yen’s volatility is significant, with no major currency intervention likely for the past year.
Last July, Yen It hit its weakest level against the dollar since 1986It reaches 161.96. Japanese rule It later confirmed that they had spent ¥5.53 trillion$36.8 billion or $36.8 billion to raise new in July.
Japan More than ¥15.32 trillion was spent ($97.06 billion) to shore up the currency during 2024.
Chung said U.S. inflation picked up later this quarter, and combined with continued economic growth, this could put upward pressure on commodities, which could strengthen the dollar.
“Investors, fed by potential key policy shifts and pauses in trade, the two-sided risk to growth is greater this year. 2025,” he said.
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