Japanese wage growth accelerated in January to its fastest clip since last June, bolstering the case for the Bank of Japan to end its negative interest rate in the near term.

Nominal cash earnings for workers rose 2% in January year on year, accelerating from a revised 0.8% increase in December, the labor ministry said Thursday. The result outpaced economists’ consensus estimate of 1.2% growth. Real wages fell 0.6%, a smaller drop than forecast and the slowest decline in a year.

The data comes as annual wage negotiations between companies and unions are reaching their climax, with the first big batch of results expected next week. The BOJ is monitoring wage trends closely for signs of a virtuous cycle linking higher pay with demand-led price gains.

That’s a precondition for the bank to end its negative interest rate policy, a move most economists expect to see this month or next. The bank’s next decision is due March 19.

Recent anecdotal evidence suggests wage growth in the coming fiscal year may speed up. The BOJ said in its January outlook report that upward pressure on wages is seen intensifying as labor market conditions continue to tighten. In Thursday’s report, data for full-time workers that avoids sampling problems and excludes bonuses and overtime pay showed growth of 2%, slowing from 2.1% in December while staying at or above the 2% threshold for a fifth month.

Japan has a chronic labor shortage. The nation’s unemployment rate dipped to 2.4% in January, the lowest since early 2020, and an indicator of demand showed there were 127 jobs for every 100 applicants that month.

A key question is whether this year’s wage talks will result in pay increases that outpace inflation — an outcome that would likely kindle more robust consumer demand.

A leading indicator for national consumer price trends picked up to 2.5% in February, putting pressure on shoppers. Household spending data set to be released Friday is expected to show outlays falling from year earlier levels for an 11th straight month in January.

UA Zensen, a labor union consisting of over 1.8 million members from sectors including retail and restaurants, is expected to unveil the results of its negotiations Thursday morning. Rengo, Japan’s largest labor union federation, will follow that in the afternoon with the average demands made by its unions. A year ago that average was 4.49%, and the ultimate tally for increases wound up at 3.58%.

One survey shows economists are looking for the negotiations to result in gains of 3.88% this year.

Speculation over the BOJ move is at a fever pitch, with overnight swaps that signal rate expectations swinging sharply after every new comment or piece of data. BOJ board member Hajime Takata hinted last week at the possibility of an early shift, stating that the bank’s price target is finally in sight.

Former Director Kazuo Momma has predicted that a rate increase won’t come until April, after the bank reviews more data. BOJ Gov. Kazuo Ueda maintained a neutral position after the G20 gathering in Sao Paulo last week, indicating that he would scrutinize data for confirmation of a virtuous wage-price cycle.

The Japanese government has dedicated itself to maintaining salary growth to ensure a complete break from deflation, after decades of stagnation that followed the burst of the nation’s asset price bubble more than 30 years ago.

Prime Minister Fumio Kishida has personally lobbied executives for large wage increases, as he seeks to mollify consumers frustrated over persistent inflation. His government has implemented a number of measures to that end, including tax breaks for companies that raise wages.

The prime minister reportedly plans to meet with business leaders and union leaders next week for a final push.