By Tetsushi Kajimoto
TOKYO Bank of Japan board member Asahi Noguchi said on Thursday that the biggest focus for the Japanese economy now was to ensure that momentum for wage growth stayed in place, with a 3% rise in nominal pay to back efforts to meet the 2% inflation target.
Noguchi, known for his reflationist views, made the remarks in a speech to business leaders in Niigata, north of Tokyo, which analysts viewed as neither dovish nor hawkish.
"Noguchi followed the consensus view among the board members," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.
"His emphasis on wage growth probably meant the BOJ will retain its easy policy until wage hikes are firmly in place following the labour talks next March."
The annual spring wage talks this year brought the highest wage hikes in 30 years, Noguchi noted, calling it "significant," as consumer inflation would slow towards the latter half of this fiscal year in line with the fading impact of high import bills.
"The biggest focus now is whether this (wage growth) momentum will be maintained or not from now on as well."
Japan's wage trends, which have been largely flat over the past three decades since the asset-bubble burst, are closely watched by global financial markets as the Bank of Japan has emphasised that sustainable pay hikes is a prerequisite for dismantling its massive monetary stimulus.
Noguchi said household inflation expectations are steadily rising, but if wage growth lags behind price hikes, consumers would have no choice but to reduce their spending, as seen lately.
Household spending will be restrained until real wages, or inflation-adjusted pay, which are currently in a negative territory, start to rise to a positive reading.
"The BOJ's mission for the time being is to realise it (positive growth in real wages) through patient monetary easing," Noguchi said.
(Reporting by Tetsushi Kajimoto; Editing by Chang-Ran Kim and Shri Navaratnam)
