BoJ's Koeda: Rising Services Prices Boost CPI Amid Wage Growth

BoJ board member Koeda highlighted that services prices, previously a drag on inflation, are now consistently contributing to CPI growth due to robust wage increases. This shift signals a tightening labor market and rising domestic cost pressures, reinforcing expectations of sustained inflation momentum in Japan. The transmission channel is wage-driven second-round effects, which are reshaping inflation dynamics and increasing the likelihood of further BoJ policy normalization. Japanese government bond yields and the JPY are particularly exposed, as markets reassess the pace of monetary tightening. Traders will focus on the upcoming March labor cash earnings report for confirmation of wage growth persistence.

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