BOJ Governor Ueda Expects Tight Labor Market to Sustain Wage Pressure in Japan

Bank of Japan Governor Kazuo Ueda emphasized at the Federal Reserve's annual Jackson Hole symposium that Japan's tight labor market is expected to sustain upward pressure on wages, with wage growth extending from large enterprises to small and medium ones. He attributed this shift to a break from long-standing deflationary expectations, driven by global inflation shocks post-pandemic, which have intensified labor shortages and wage increases despite Japan's declining working-age population. Ueda signaled optimism for conditions favorable to another interest rate hike later this year, noting that labor mobility has increased as younger workers seek better pay. Additionally, he highlighted demographic challenges and proposed boosting the labor force by increasing full-time employment among women and expanding the role of foreign workers, alongside supportive measures like enhanced after-school care. Ueda's remarks align with broader concerns among global central bankers about labor market tightness and inflation dynamics.