Boj Offers Dovish View On Economy

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Boj Offers Dovish View On Economy

Bank Of Japan (Boj) Offers Dovish View On Economy

While the rest of the world was expecting a hawkish stance from the BoJ, it appears the central bank has surprised everyone once again. On Thursday, BoJ lowered the economic forecast for several reasons.

However, the BoJ remains confident about the prospects of a broadening in wages. This means that while the BoJ is still dovish about growth, there is still a chance of rate hikes in 2024.

The BoJ released its quarterly report, which looks at various regional economies. According to BoJ, smaller firms in Japan will also likely increase the waves. Given that the big companies have also offered massive pay hikes, something similar will be followed by small companies.

If this happens, it will be the 2nd year in a row of strong wage growth in Japan. This also highlights the fact that Japanese companies are now changing their views regarding labor costs.

All of this works in the favor of the BoJ as many companies have already started to pass the increased labor costs to the end consumers. This means an increase in inflation is no longer a dream but something that is fast approaching.

The regional report of BoJ will be closely watched at the next meeting of BoJ, due on the 25th and 26th April. It would be interesting to see how the members will decipher this report.

The BOJ has already put an end to negative interest rates after a period of 8 years. Now, it seems that the government is focusing once again on driving growth without massive stimulus measures.

Now, the prospects of rate hikes will depend on whether the smaller companies will also follow in the footsteps of bigger firms or not!

According to one expert, several companies have already started to complain about labor shortages. This is a sign that the labor market in Japan is very tight!

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