Overview

• Speaking at the Federal Reserve’s Jackson Hole symposium, Kazuo Ueda said the labor market is likely to stay tight and keep upward pressure on pay unless a major negative demand shock occurs.
• Ueda said wage growth is broadening beyond large enterprises to small and medium-sized firms.
• He described labor shortages as one of Japan’s most pressing economic issues and said the pandemic-era global inflation shock helped break entrenched deflationary expectations.
• Ueda did not discuss policy settings, but reporting indicates his remarks are adding to market speculation of another BOJ rate hike this year.
• Japan’s core CPI rose 3.1% in July and the 10-year government bond yield climbed to its highest level since 2008 as investors price further policy normalization.