MNI BRIEF: BOJ Should Temper Wage Hike Outlook - Economists

Bank of Japan economists warn policymakers should not overestimate the impact of hefty wage hikes announced by some big firms on the back of high corporate profits and labour shortages as many companies, including smaller ones, have not decided to raise wages yet

While the probability of wage hikes at major firms has increased, the bank lacks sufficient data – particularly on smaller firms – to judge the degree of wage rises, the economists warn. But the economic environment, such as labour shortages and corporate profits, remains more favourable than 2023 and has increased pressure on firms to raise wages to secure necessary workers, they said.

BOJ branch managers on Thursday pointed out the sustainability of wage hikes at major firms, but they also warned of high uncertainty over wage hikes at smaller companies, which vary widely. MNI reported last week the BOJ was considering how to implement its interest-rate target should it move away from negative rates in April. (See MNI POLICY: BOJ Mulls Framework Post Likely April Rate Liftoff)