How fast do wages have to rise to reach 2% inflation?

We estimate that wages would have to rise by 3% or more to reach the Bank of Japan’s 2% inflation target. Even if the unemployment rate drops further in the months ahead, we think that wage growth may only reach around 1.5% by the end of next year. The upshot is that the Bank still has more work to do to ensure that QQE succeeds. 

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