Bank of Japan policymakers kicked off their 2-day meeting on Monday to discuss monetary measures, including ending the era of negative interest rates.

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

Japan's largest labor union federation, Rengo, said last week businesses in the country agreed to an average pay hike of 5.3 percent in the annual spring wage negotiations. That is the biggest 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.

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

On Monday, the board members are believed to have exchanged 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 the meeting will be closely watched as it is likely to affect both the economy and financial markets.