Prior to the wage growth data, Bank of Japan Governor Kazuo stated that the Bank needs more wage data before making a move.
Recent wage growth data aligned with firms raising wages, with base pay rising at the fastest pace in over 30 years.
Amid speculation about the timing of a BoJ rate hike, traders should monitor BoJ chatter. Insights into wage growth, the economic outlook, and monetary policy will impact the USD/JPY pair. In December, a Reuters poll revealed that analysts expect the BoJ to lift interest rates to 0.5% in Q1 2025.
Expert Views on Japan’s Economy and the BoJ’s Rate Path
Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently discussed wage growth trends and the BoJ’s policy outlook, stating,
“Nominal wages experienced the highest growth rate since 1992 at +2.7% YoY in October, which lifted real wages to +0.1% YoY (Chart 1). Furthermore, services CPI inflation excluding imputed rent picked up to +2.2% YoY in October from +1.9% YoY in September. These results indicate that companies are transferring their higher labor costs to customers, which should be an encouraging development for the BoJ.”
USD/JPY Trends: US Inflation in Focus
Shifting our focus to the US session, consumer inflation expectations may influence the USD/JPY pair further.