MNI BRIEF: BOJ Ueda Sees 3% Wage Hikes Vital For 2% Target

The Bank of Japan is focused on whether the economy will achieve wage hikes of around 3% and spread broadly, Governor Kazuo Ueda told lawmakers Wednesday. 

“I hope wages continue to rise to around 3%, including 1% from the rise in productivity, and it is consistent with 2% price target,” he said. 

The BOJ is focused on whether wage hikes transfer to services prices appropriately and the bank continues to analyse whether the medium- to long-term inflation will rise toward 2%, he continued.

Wage hikes are spreading, which in turn will support private consumption and the BOJ will continue to gauge how U.S. trade policies affect the global economy and confidence, he continued. 

Base pay rose 3.79% this year, the second wage hike survey by the Japanese Trade Union Confederation Rengo, showed recently, up from 3.64% from a year earlier. Rengo will update the degree of wage hikes up to July as wage hikes at smaller firms will gradually be incorporated into the survey.

Wages rose 3.56% in 2024, the final wage hike survey showed, up from 2.12% in 2023.