Eyes on Bank of Japan as unions announce wage hikes

TOKYO, March 15, (AFP) - The results of key wage hike negotiations in Japan will be announced Friday, with a win for workers expected to set the stage for a hotly anticipated shift away from the central bank's ultra-loose monetary policy.
Wage growth has been sluggish in Japan for decades, and the government partly blames this for the economy's woes.
But this year members of Japan's largest trade union, Rengo, have demanded their highest average pay increase since 1994 in annual spring wage talks.
Rengo reports preliminary results of the bargaining later Friday, with hopes high after major firms including Toyota and Panasonic ceded fully to their workers' pay demands.
Its announcement will be closely watched by economists looking for signs that the Bank of Japan could soon scale back its long-standing monetary easing policies.
The bank's governor Kazuo Ueda has called the spring negotiations an "important point" in deliberations over when and how to make the shift.
Central banks worldwide have raised interest rates in recent years to tackle soaring inflation, but the BoJ is an outlier -- keeping in place its negative interest rate and other measures designed to boost the stagnant economy.
Its decision to stick with these policies has sharply weakened the yen against the dollar.
Even so, the bank has stressed that it needs to see a "virtuous cycle" of rising wages and sustained, demand-driven inflation of two percent before changing its ways.
The bank will announce its policy decision on Tuesday.
"Rengo's first tally of responses... should greatly encourage the Bank of Japan to revise its policy at its March meeting," said BNP Paribas chief economist Ryutaro Kono.
This time last year Rengo announced an average pay rise of 3.8 percent, or 11,844 yen ($80) per month -- its best result since comparative figures became available in 2013.