Investors are waiting to see if the Bank of Japan will lift interest rates next week, in a move that would end its eight-year experiment with sub-zero borrowing costs.
The Japanese central bank is also expected formally to abandon its policy of capping the yields of 10-year Japanese government bonds, although analysts believe it is likely to stress that it will continue to buy JGBs to limit the impact on financial markets.
The policy meeting comes after large Japanese companies agreed to increase wages by 5.28 per cent during this spring’s pay negotiations, the biggest increase since 1991. BoJ governor Kazuo Ueda has long argued that more evidence of wage growth is needed before the central bank becomes confident enough about sustainably achieving its 2 per cent inflation target.