The Bank of Japan’s yield curve control and negative interest rate policy will likely be removed by mid-2024, and Japanese stocks will continue to rally from the government’s wage hiking efforts, according to JPMorgan Securities Japan Co.’s Rie Nishihara.
While steering away from commenting on the likely outcome of this week’s central bank meeting, the chief Japan equity strategist pointed to Prime Minister Fumio Kishida’s efforts to raise Japan’s minimum wage as a key reason behind her views.
“This government initiative is very strong,” Nishihara said at a Bloomberg New Voices event Tuesday evening, adding that the long-term commitment gives her confidence that the virtuous cycle between wages and inflation will continue. “I’m actually optimistic of this shift from deflation to inflation,” she said, also noting that around 20% of wages in Japan are impacted by minimum pay levels.
The Nikkei 225, which is already seeing over 30-year highs, may reach 35,000 to 36,000 by year-end or mid-2024, according to Nishihara, as Japan shifts further away from deflation to inflation.
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