Bank of Japan Governor Kozo Oyida said that ongoing annual negotiations between companies and unions are crucial in determining the timing of gradually phasing out the massive stimulus program.
Oyida told parliament on Wednesday that the central bank would consider adjusting its policy framework, which includes a negative interest rate and control over bond yields and other tools, if there is sustainable progress toward the 2% inflation target. Oyida stated that “the outcome of this year’s annual wage negotiations is of utmost importance” in deciding when to exit the massive stimulus.
These remarks come ahead of the central bank’s policy meeting next week, where the board will discuss whether the outlook is bright enough to end the negative interest rate policy that has been in place since 2016.
Toyota Motor Corp agreed to grant factory workers the largest wage increase in 25 years on Wednesday, raising expectations that significant wage hikes will provide room for a major policy shift by the central bank next week.
Sources told Reuters that an increasing number of policymakers at the Bank of Japan are supporting the idea of ending negative interest rates at the March 18-19 meeting amid expectations of significant wage increases in annual wage negotiations.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
