This slide looks at the key drivers of monetary policy in Japan as the economy begins to normalise its policies. The chart on the left looks at the pace of core inflation and nominal wage growth. Historically, wage growth and inflation in Japan have been very low and below the Bank of Japan's (BoJ) target but this is changing. The BoJ widened its yield curve control (YCC) target range towards the end of 2022, and market is expecting a further move away from YCC in the near future. The BoJ has been purchasing Japanese government bonds (JGBs) at a record pace, leading to an upsurge in BoJ holdings of JGBs. BoJ holdings of JGBs now stand at more than 50% of total outstanding JGBs.