Japan's wage and price data to remain key for BOJ's monetary policy

Considering that there are signs of wage growth even at smaller firms in Japan, as defined in the Ministry of Health, Labor and Welfare's Monthly Labor Survey, a rise in wages and prices for services starting this summer could lead to improvement in the inflation rate.

"If the impact from the destabilization of global financial conditions remains limited, which is considered the main scenario at this point, the BOJ's monetary policy is expected to basically depend on the wage and price data starting this summer", says Bank of America.

Accordingly, the most likely scenario is that the BOJ will maintain its current pace of asset purchases. There is a need to wait for the data, however, before knowing whether that will be sufficient to boost inflation to the 2% target.