 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] August 23, 2025 – Kazuo Ueda, Governor of the Bank of Japan (BOJ), suggested that conditions are aligning for a potential policy rate increase, speaking at the U.S. Federal Reserve’s annual Jackson Hole Economic Symposium.
Ueda noted that wage growth in Japan is now spreading beyond large corporations to small and medium-sized enterprises, reflecting a structural shift in the labor market. He pointed out that, despite demographic challenges such as a shrinking working-age population, Japan had long seen stagnant wages due to entrenched deflationary expectations that discouraged companies from raising prices and salaries.
“The COVID-19 pandemic and subsequent global inflation shock helped pull Japan out of prolonged deflation,” Ueda said. “Labor shortages have now become one of our most pressing economic challenges. Unless we face a significant negative demand shock, tight labor market conditions are likely to continue applying upward pressure on wages.”
He emphasized that the BOJ will “closely monitor these developments and continue reflecting supply-side changes in monetary policy decisions.”
Since ending its negative interest rate policy in March 2024 for the first time in 17 years, the BOJ has raised its benchmark rate from near zero to around 0.5%. The central bank has since held rates steady for four consecutive meetings through July 2025.
Market analysts view Ueda’s Jackson Hole remarks as a signal that the BOJ may resume its rate hike cycle, which had been paused amid concerns over U.S. trade policy uncertainty. According to a Reuters survey of economists earlier this month, roughly two-thirds expect the BOJ to raise rates by at least 25 basis points before year-end.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
