MNI POLICY: Wages Data Support BOJ Exit From Negative Rates

Recent Japanese wage data could allow the Bank of Japan to exit negative rates by as early as its March 18-19 meeting, some officials consider, though others still want to ascertain the impact of salary hikes on services prices in the Tokyo consumer price index due out on April 26, MNI understands.

Bank of Japan officials said wage hikes are broadly accelerating as expected, with increases at larger firms stronger than anticipated and more smaller firms considering raising wages. But April’s CPI data will be key for the fiscal 2026 inflation projection in the BOJ’s April Outlook Report.

Major economic data are set to be weak for the first quarter but Bank officials expect the economy to recover in or after the second quarter. The BOJ is expected to slightly tweak its next economic assessment, by adding “as a trend” to the baseline view that Japan’s economy has recovered moderately in the wake of recent weak private consumption and industrial production. (See MNI POLICY: Weaker Econ Data Risk May Push March BOJ Action)

Bank officials expect consumer spending to recover as real wage growth becomes less negative. While capital investment is not strong, a government survey released on Monday confirmed high corporate profits.