BoJ board member Junko Nakagawa highlighted a promising outlook for wage growth, expressed confidence in the emergence of a positive cycle between inflation and wages, a prerequisite for the central bank to exit negative interest rate.
“We can say that prospects for the economy to achieve a positive cycle of inflation and wages are in sight,” she stated, pointing to a shift in the wage-setting behavior of companies as a sign of economic optimism.
According to Nakagawa, there are “clear signs of change in how companies set wages,” with businesses increasingly inclined to offer annual pay raises in response to the ongoing labor shortages. This adjustment marks a significant departure from previous practices and suggests that companies are prepared to propose wage increases surpassing those of the previous year.
“Japan is moving steadily towards sustainably and stably achieving our 2% inflation target,” she remarked.
