BOJ upbeat on regional Japan economy, flags wage hike prospect

BOJ upbeat on regional Japan economy, flags wage hike prospect
© Reuters. FILE PHOTO: Pedestrians wearing protective face masks, amid the coronavirus disease (COVID-19) pandemic, are seen behind artificial cherry blossom decorations at a shopping district on the first day after the lifting of COVID-19 restrictions imposed on To

By Leika Kihara

TOKYO (Reuters) -Most of Japan’s regional economies are picking up moderately with some firms considering raising wages, the central bank said in a quarterly report, underscoring its hope that household income will grow enough to compensate for rising living costs.

In the report released on Thursday, the Bank of Japan (BOJ) raised its assessment for one of the country’s nine regions and left its view unchanged for the remaining eight.

“Many regions saw their economies pick up moderately as supply constraints ease,” the BOJ said, adding that firms saw consumption recover as COVID-19 infection cases fell.

“Companies enjoying strong earnings or facing labour shortages have raised summer bonuses or considering raising wages next spring,” the BOJ said. “On the other hand, some companies said they were cautious of raising wages due to the severe business environment such as rising raw material costs.”

The BOJ remains an outlier among a global wave of central banks tightening monetary policy to combat soaring inflation.

While consumer inflation has exceeded his 2% target, BOJ Governor Haruhiko Kuroda has stressed that recent cost-push inflation must be accompanied by higher wage growth for the central bank to consider tweaking its ultra-easy policy.

Source: Reuters