The nomination of a hawkish BoJ Chair would be illogical – Commerzbank
|Japan’s government said that cooperation with the business and labor circles is essential. Economists at Commerzbank analyze the implications of the upcoming negotiations on wage rises.
Japan’s version of Germany’s contrat social of the 1960s and 70s?
“This time it is being reported that the government was planning to bring employers’ representatives and unions together for them to agree on wage rises. Any German reader with a good memory (and who is old enough) might remember a similar arrangement in Germany in the 1960s and 1970s (‘konzertierte Aktion’ or contrat social).”
“The Germans do not have fond memories of such an arrangement. It ended in bitter disagreement. That might work better in Japan. And even if one was sceptical, a government initiative like that would be informative for JPY investors. It would prove that the government is interested after all in creating sustainable reflation. In that context, the nomination of a hawkish BoJ Chair would be illogical.”
“Before you run off and sell JPY, let me warn you: a government’s behavior is not always as consistent as I have assumed up to this point. If the government urges the two sides of industry towards higher wages, this could be due to an attempt to gain the support of the voters rather than a coherent macroeconomic plan.”
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