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Wage growth will slow again next year

The sharp acceleration in regular earnings growth in July poses some upside risks to our wage growth forecasts. And with smaller firms now lifting wages rapidly, too, the Bank of Japan will feel encouraged to press ahead with another rate hike later this year. However, we still expect next year's spring wage negotiations to result in smaller pay hikes, which underpins our view that the Bank won't tighten policy any further in 2025.

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