Bank of Japan policymakers will discuss ending the era of negative interest rates at their two-day meeting starting on Monday.

Many observers say recent pay hikes signal that the economic conditions are being met for a shift in the BOJ's massive monetary easing.

Japan's largest labor union federation, Rengo, said last week that businesses in the country had agreed to an average raise of 5.28 percent in the annual spring pay negotiations. That is the biggest wage increase in 33 years.

The central bank has kept a close watch over wage talks. It sees a virtuous cycle of pay-and-price increases as a pre-condition for adjusting its ultra-easy monetary policy.

BOJ Governor Ueda Kazuo told lawmakers last week that policymakers will consider revising the negative rate policy.

On Monday, BOJ board members will exchange opinions on the domestic and overseas economies, as well as wages and prices.

On Tuesday, they will discuss the likelihood of meeting their target of stable 2-percent inflation, and whether to end negative interest rates.

Policymakers will also consider revising the yield-curve control framework. This holds down long-term interest rates as well as short-term rates.

If the BOJ does decide to end its negative-rate policy, it would mark the central bank's first interest-rate hike in 17 years.
The outcome of this week's policy meeting will be closely watched as it is likely to affect both the economy and financial markets.