Core Viewpoint - The Governor of the Bank of Japan, Kazuo Ueda, indicated that the central bank has limited room to support the economy through interest rate cuts if faced with strong downward pressure on the economy and prices, maintaining the short-term interest rate at 0.5% [1] Group 1 - The Bank of Japan is currently maintaining a short-term interest rate of 0.5% [1] - There is a recognition of potential strong downward pressure on the economy and prices [1] - The central bank's ability to lower interest rates to support the economy is constrained [1]

Group 1 - Japan's largest business lobbying group reports that member companies' employees have secured over 5% salary increases for two consecutive years, indicating a sustained upward trend in wages amid a tightening labor market [1][4] - The average salary increase for 620,000 employees from 97 major companies in Japan is reported at 5.38%, slightly lower than last year's 5.58%, but significantly higher than the 20-year average increase of approximately 2.3% [1][4] - 11 out of 17 industries in Japan have seen salary increases higher than last year, with transportation, electronics, and chemicals leading the way, while traditional manufacturing sectors like automotive and steel have experienced more moderate increases [4][6] Group 2 - Over 50% of Japanese companies are facing severe regular employee shortages, contributing to the upward pressure on wages [6] - The core Consumer Price Index (CPI) is expected to rise to 3.4%, marking a two-year high, as inflation has remained at or above the Bank of Japan's 2% target for three consecutive years [6] - The recent rise in long-term Japanese government bond yields, particularly the 40-year bond reaching 3.675%, is constraining the Bank of Japan's ability to raise interest rates [7]