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Japan's real wages fell for the ninth consecutive month in September, decreasing by 1.4% year-on-year, as inflation outpaced nominal wage growth of 1.9%. This trend complicates the Bank of Japan's (BOJ) rate hike plans, with Governor Kazuo Ueda indicating that the 2026 wage outlook will be crucial for future decisions. Average nominal wages rose to 297,145 yen, but fell short of the 3.4% rise in consumer prices. The largest labor organization, Rengo, aims for a 5% wage increase in 2026, while Prime Minister Sanae Takaichi emphasizes the need for sustainable inflation with wage gains.

- Japan's real wages fell for the ninth consecutive month in September, with inflation outpacing nominal pay, complicating the Bank of Japan's rate hike plans.  
- Real wages decreased by 1.4 percent year-on-year, while nominal wages rose by 1.9 percent, failing to keep up with a 3.4 percent increase in consumer prices.  
- The Bank of Japan maintained interest rates, with Governor Kazuo Ueda indicating that the 2026 wage outlook will be crucial for future rate decisions.

Japan's real wages down for ninth month in September

Japan yet to sustainably hit BOJ's price target, PM Takaichi says

marketscreener

Japan yet to sustainably hit BOJ's price target, PM Takaichi says

Market movements were influenced by policy uncertainty as the Bank of Japan held its rate at 0.5%, despite rising inflation, leading to a 4.2% decline in the yen. Governor Ueda's comments suggested a slow normalization process. Meanwhile, the U.S. Federal Reserve cut rates but faced dissent from three officials, indicating a policy divide. This prompted investors to seek safe-haven assets like the U.S. dollar and short-term bonds.

Unusual Whales

Markets driven by policy ambiguity: BOJ holds at 0.5%, U.S. Fed cuts rates with 3 dissents, yen falls 4.2%, dollar safe haven.

The Japanese yen is set for its worst monthly drop since July, following the Bank of Japan's decision to maintain interest rates, disappointing traders. The dollar has gained 4.1% against the yen this month, while the Federal Reserve's stance has dampened expectations for a December rate cut. The euro and sterling also fell as the ECB and BOE kept rates unchanged. Analysts remain optimistic about the yen's future, anticipating a normalization of policy. Bitcoin rose 2.37% to $110,080 amid these developments.

Reuters

FOREX-Yen faces worst monthly drop since July as BOJ disappoints

Nikkei Ends Higher as BOJ Flags Growing Confidence in Outlook

Nikkei Ends Higher as BOJ Flags Growing Confidence in Outlook

The Bank of Japan's governor hints at a potential interest rate hike in December or January, influenced by wage momentum and yen movements. The central bank maintained rates at 0.5% but revised growth forecasts upward. Analysts predict a near-term rate increase, with attention on upcoming wage negotiations and economic data. The yen's performance may impact timing, as a decline could raise import costs and inflation. The BOJ's next policy meeting is set for December 18-19, with further data expected to inform decisions.

Analysis:BOJ locks in near-term rate hike, yen may sway timing

Japanese government bonds rose after strong demand at a two-year auction, reversing earlier losses. This uptick followed a dovish stance from Bank of Japan Governor Kazuo Ueda, who opted not to raise interest rates. The two-year JGB yield fell to 0.91%, with a bid-to-cover ratio of 4.35, indicating robust demand. The five-year yield remained flat at 1.21%, while the 30-year yield dropped to 3.025%, marking a three-month low.

Japan bonds rise after dovish BOJ stokes demand at two-year auction

Core consumer prices in Tokyo rose 2.8% year-on-year in October, surpassing the forecast of 2.6%. This increase keeps market expectations alive for a near-term interest rate hike by the Bank of Japan (BOJ), which has already raised rates to 0.5% earlier this year. The rise in the consumer price index, excluding fresh food and fuel, indicates sustained inflation above the BOJ's 2% target, despite the governor's cautious stance on further rate hikes due to economic uncertainties.

- Core consumer prices in Tokyo rose 2.8% year-on-year in October, surpassing the forecast of 2.6%.  
- This increase keeps market expectations alive for a near-term interest rate hike by the Bank of Japan (BOJ), following a 2.5% rise in September.  
- Despite inflation exceeding the BOJ's 2% target for over three years, Governor Kazuo Ueda emphasizes caution due to uncertainties regarding U.S. tariffs' impact on Japan's economy.  

Core consumer prices in Japan's capital rise faster-than-expected

Asian stocks showed volatility following the Federal Reserve's interest rate cut, with investors awaiting a meeting between U.S. President Trump and Chinese leader Xi Jinping in South Korea. The Fed's recent cut has led to a shift in market expectations regarding future rate changes, with a reduced likelihood of further cuts next month. Meanwhile, corporate earnings, particularly in the tech sector, are causing concern among investors, despite a generally strong U.S. economy. The Bank of Japan is expected to maintain its current rates, while the European Central Bank is also anticipated to hold steady.

Asia stocks wobble as Fed cuts, BOJ and Trump-Xi meeting in view

Japan's Nikkei share average reached a new high of 51,620.79 after the Bank of Japan decided not to raise interest rates. The broader Topix index also saw a gain of 0.7%. The yen weakened against the U.S. dollar, and JGB futures experienced slight declines. Market focus now shifts to BOJ Governor Kazuo Ueda's upcoming news conference for insights on potential rate hikes in December. Analysts note the impressive market performance amid high inflation and external pressures on the BOJ's policy stance.