0257 GMT - Stronger-than-expected labor cash earnings growth in Japan and an expansionary services PMI reading continues to support BOJ policy normalization, ING's Min Joo Kang says. Data released earlier showed solid on-year labor cash earnings growth in December, with base earnings rising steadily for a second month, while January's services PMI marked its highest level since September 2024. "Strong wage growth is likely to lead to consumption growth and keep inflation above 2%," the economist says. The market is pricing in another BOJ rate hike in July, but ING forecasts a move in May is possible, especially if this year's Shunto wage talk results are as strong as last year's. ING now sees BOJ's terminal rate at 1.25% versus 1.0% previously, tipping hikes in May and October of 2025, followed by another in 2026. (fabiana.negrinochoa@wsj.com)
(END) Dow Jones Newswires
February 04, 2025 21:57 ET (02:57 GMT)
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