by Leika Kihara
TOKYO, March 8 (Reuters) – A growing number of members of the Bank of Japan’s (BOJ) board of governors favor a rate hike in March as 2024 wage talks could lead to significant pay hikes, said four sources close to the matter.
By ending negative rates, the central bank could also lift its yield curve control and risky asset purchase program, these sources said.
In order to avoid a sudden rise in long-term rates, the BOJ will probably commit to intervening in the bond market in the event of a sharp rise in yields, or give indications on the amount of sovereigns it will continue to buy, they said. they declared.
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A change in monetary policy is not a certainty, as there is no consensus on the timetable among the BOJ’s nine board members, the sources said.
The next central bank meeting is scheduled for March 18-19, and the next one for April 25-26.
The results of the wage negotiations between large companies and their unions will be announced on March 13, while the first conclusions of the majority union Rengo’s investigation into these negotiations will be published on March 15. These two indicators will be taken into account by the BOJ as part of its monetary policy.
Significant wage hikes will likely increase the risk of a rate hike in March, as large companies typically set the tone for the rest of the private sector, the sources said.
The BOJ hopes large wage increases will encourage consumers to spend more, boosting demand and prices after years of stagnation and deflation.
“If the results of the spring wage negotiations are good, the Bank of Japan will not necessarily need to wait until April” to raise rates, one of the sources said, a view shared by one other source.
But the BOJ could give itself until April if board members prefer to wait for next month’s “tankan” survey on the business climate and the report from the bank’s regional branches on wage prospects at the national scale before making a decision, the sources said.
Rengo said Thursday that average demands for wage increases reached 5.85 percent for this year, surpassing 5 percent for the first time in 30 years. (Report by Leika Kihara, French version Corentin Chappron, edited by)
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