(Bloomberg) -- The Bank of Japan’s branch managers see wage growth filtering across the nation’s regions, giving Governor Kazuo Ueda additional evidence in support of a near-term interest rate hike.
Many regions reported that “wage growth is broadening to surpass or is in line with last year’s elevated levels” for small and medium-sized businesses, according to a quarterly BOJ report released Monday.
The report summarizing the views of the managers cited the ripple effect of big wage gains negotiated by big companies and unions, in addition to the need to secure staff amid worker shortages and rising prices.
The comments are likely to fuel ongoing market speculation that the central bank may raise rates later this month. While the bank will continue to monitor pay trends, Ueda can now tick off a key box indicating that wage growth is spreading.
Ueda has repeatedly referred to the need to see wages reaching across the economy as a vital factor when considering higher rates.
One in three BOJ watchers expects the policy rate to be raised from a 0 to 0.1% range at the end of a meeting on July 31, according to a Bloomberg survey.
The BOJ report follows government figures earlier Monday that showed Japan’s base pay jumped by the most since 1993. That result shows that the best outcome in three decades for spring wage talks is starting to impact overall national data.
The pay deals were agreed earlier this year between companies and workers in the nation’s biggest union federation. An initial estimate of the results released in March was a major factor that pushed the BOJ to raise rates for the first time in 17 years.
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