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Mar 13 - 12:55 AM

ING: Analyzing BoJ's Stance and Market Reactions Ahead of Key Wage Data

By eFXdata  —  Mar 12 - 04:30 PM


 ING delves into the recent comments by Bank of Japan (BoJ) Governor Kazuo Ueda and their impact on the Japanese yen (JPY), alongside market anticipations ahead of crucial wage data. Ueda’s cautious stance on the economy and the upcoming wage negotiations results have stirred volatility in JPY markets, influencing expectations for potential policy adjustments by the BoJ.

Key Points:

  1. Governor Ueda's Balanced View: Ueda's comments highlighted ongoing recovery in Japan’s economy, despite acknowledging weaknesses in household spending. His remarks suggest a watchful approach, emphasizing the need for evidence of a sustainable wage-inflation cycle before policy shifts.
  2. Market Speculation on Rate Hike: Reports suggest BoJ officials are divided on whether to raise interest rates in March or April, with upcoming wage data deemed crucial for the decision. The market’s reaction to these speculations has influenced JPY volatility, with expectations for a March rate hike fluctuating.
  3. Wage Data's Critical Role: Early wage negotiation results have shown significant demands for wage increases, surpassing previous years and setting a backdrop for potentially strong official wage growth figures. These outcomes could dictate the BoJ's immediate policy direction.
  4. Market Pricing and JPY Movement: The JPY rates market has slightly scaled back the likelihood of a March rate hike following Ueda’s comments and subsequent reports. However, the final stance could shift rapidly based on the forthcoming wage data and its implications for BoJ policy.


The Bank of Japan’s upcoming policy decision remains a focal point for market participants, with Governor Ueda’s cautious remarks and impending wage data results contributing to heightened uncertainty and volatility for the JPY. While the market currently leans towards expecting a rate hike in the near term, the ultimate direction will hinge on concrete signs of wage growth, emphasizing the significance of the upcoming wage negotiation outcomes in shaping BoJ policy and JPY dynamics.

ING Research/Market Commentary


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