Japan's real wages rise for the fourth consecutive month, providing support for Bank of Japan's rate hikes

Japan’s Ministry of Health, Labour and Welfare released data on Friday showing that real wages, adjusted for inflation, rose by 1.9% year-on-year—accelerating from the revised 1.4% in the previous month, surpassing economists’ expectations of 1.7%, and marking the longest consecutive monthly rise since late 2021. Nominal wages increased by 3.5% year-on-year, also exceeding the market consensus of 3.1%. Basic salaries rose by 3.4%. The Bank of Japan’s key metric, which tracks full-time employees’ wages to avoid sampling bias, increased by 2.6%, both data points reflecting strengthened wage fundamentals. The release of wage data comes as the Bank of Japan prepares for its monetary policy meeting on June 15–16. Markets widely expect the policy board to raise the benchmark interest rate by 25 basis points. Steady wage growth signals resilient domestic demand, further supporting the normalization of monetary policy. Sources revealed this week that Japanese regulators will consider a rate hike at this meeting and discuss the scope for further increases in subsequent phases after 2026.