While the surge in bonus payments in December in principle bodes well for the upcoming spring wage negotiations as it signals strong corporate profitability, it's worth highlighting that growth in winter bonuses was rather weak ahead of the bumper 2024 Shunto. Nonetheless, with real wages still shrinking last year and firms facing severe labour shortages, we expect another strong showing in this year's Shunto. That should prompt the Bank of Japan to hike rates again in May, earlier than financial markets are anticipating.
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