Japan faces a significant economic shift as bankers grapple with the challenge of learning to raise rates, prompted by a back-to-back wage bonanza. The move is seen as opening the door for a potential exit from the ultra-loose monetary policy by the Bank of Japan (BOJ), with Pimco already positioning by buying yen in preparation for tighter BOJ policies.
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Japan’s big employers are set to follow this year’s bumper pay hikes with another round in 2024, which are expected to help lift household spending and give the central bank the conditions it needs to finally roll back massive monetary stimulus.
Early indications from businesses, unions and economists suggest the labour and cost pressures that set the stage for this year’s pay hikes – the largest in more than three decades – will persist heading into next year’s key spring wage talks.
The head of major beverage maker Suntory Holdings Ltd, for example, plans to offer employees average monthly pay hikes of 7% in 2024 for the second straight year, to retain talent in a tight labour market and offset rising inflation.
- Firm began building long yen position in recent months: Sharef
- Yen has been worst-performing Group-of-10 currency this year
Pacific Investment Management Co. is buying the yen on a bet the Bank of Japan will be pressured into tightening monetary policy as inflation quickens.
The bond giant started building a long yen position when Japan’s currency weakened past 140 per dollar a few months ago, said Emmanuel Sharef, a Pimco fund manager, whose areas of focus include multi-asset investing and asset allocation.