The Bank of Japan is likely to keep interest rates on hold when it meets. This week, according to analysts, providing relief to markets that were thrown into turmoil earlier this month by the prospect of monetary policy tightening.
“Consumption remains weak, and real wage growth remains negative. We believe the Bank of Japan will hold off on raising interest rates until consumption recovers,” said Masamichi Adachi, an economist at UBS Securities.
Japan’s household spending fell 1.8% on-year in May, versus expectations for a 0.1% rise, while real wages fell for a record 26 straight months through May, as price increases erode the purchasing power of checks.