Japan's Real Wages Decline for the First Time in Three Months ... Long-term Interest Rates Reach 16-year High at 1.575%

# Long-Term Rate at 1.575%, Highest in 16 Years on Speculation of Bank of Japan’s Rate Hike (Tokyo=Yonhap News) By Kyung Soo-hyun and Park Sang-hyun, Correspondents – Japanese workers' real wages have returned to a decline after three months. According to the “January Labor Statistics Survey” (preliminary figures) released by Japan’s Ministry of Health, Labor and Welfare on the 10th, the average nominal wage per employee at companies with five or more employees was 295,505 yen (approximately 2.90 million won) per month, up 2.8% compared to the same month last year. However, when adjusted for inflation, real wages decreased by 1.8% compared to the same month last year, marking a return to a downward trend not seen in three months. An official from the Ministry of Health, Labor and Welfare told Kyodo News, “Unless high inflation stabilizes by the time wages for March, which are influenced by the spring wage negotiations, are determined, the negative trend in real wages is likely to continue.” The Nihon Keizai Shimbun (Nikkei) reported, “The consumer price index used to calculate real wages increased by 4.7%, outpacing the growth in nominal wages.” It attributed the rise to surges in food prices, such as rice and cabbage, and the Japanese government’s reductions in energy cost support. Japanese real wages had been on a declining trajectory for 26 consecutive months from April 2022 to May last year. Since then, they have fluctuated, with increases limited to June, July, November, and December. Meanwhile, the yield on the 10-year Japanese government bond, a key long-term interest rate indicator, briefly rose to 1.575% on this day, its highest level since October 2008, 16 years and five months ago. Kyodo News explained that speculation regarding the Bank of Japan's additional rate hikes, following its January increase of the short-term policy rate from around 0.25% to about 0.5%, influenced this rise. Nikkei also pointed out that the view that the Bank of Japan might raise rates higher than initially expected has contributed to increasing long-term rates. The Bank of Japan will hold its second monetary policy meeting of the year from March 18 to 19. psh59@yna.co.kr