On June 13, the Bank of Japan began a two-day policy meeting, with market expectations that the authorities would stay put. Nozomi Moriya, a stock strategist at UBS Investment Bank in Japan, pointed out that Japanese wage growth continues to improve, with average annual pay rises of around 5% during the "spring wage negotiations", far higher than the 2% of the previous year. This has led the Bank of Japan to end its negative interest rate policy in March and gradually move towards normalizing monetary policy. However, due to weak domestic consumption, the authorities remain relatively cautious in their monetary policy stance. Nozomi Moriya noted that Japanese consumers are quite conservative and do not easily change their spending habits, leading to sustained weak consumption. However, with substantial wage growth expected in the third quarter, there is confidence that consumption will increase. The Bank of Japan needs to see that wage increases domestic consumption before they can have confidence in raising interest rates. Therefore, if consumption improves in the third quarter, the authorities are likely to raise rates in October. She expects the Bank of Japan to raise rates by 0.15% in October, followed by three more increases of 0.25% each time, leading to a yen interest rate of 1% next year. She also pointed out that the tourism industry has been a major driver of the Japanese economy, but over a year after the pandemic, the recovery momentum in the tourism industry is gradually fading. Therefore, the market is now focusing on the domestic consumption market and is waiting to see when Japanese domestic consumption will bottom out and rebound. As for the yen, Nozomi Moriya expects limited room for a significant depreciation of the yen, with the yen expected to reach 155 against the dollar by the end of the second quarter, but fall back to 160 by the end of the year.