BoJ Governor Kazuo Ueda reiterated that Japan has not yet achieved sustainable 2% inflation. “I don’t think we are there yet,” he said after G20 finance ministers’ meeting.
A significant focus for BoJ in the near term will be the outcome of upcoming annual wage negotiations between companies and unions. Ueda pointed out the importance of these negotiations in determining the potential for a positive wage-inflation cycle in Japan.
“We need to confirm whether a positive wage-inflation cycle would kick off and strengthen,” he noted, acknowledging the rising demands from unions for pay increases exceeding last year’s and the apparent willingness among many firms to comply.
However, Ueda also stressed the need for a comprehensive review of the collective results of these wage negotiations, alongside other economic data, to gauge whether wages and inflation will sustainably rise in tandem.
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