As for wage setting, as seen in annual wage negotiations this spring, the rise in inflation is increasingly being taken into account in wage negotiations between management and labor. This improvement in the output gap and the rise in inflation expectations are expected to continue.
Of course, the degree of Hong Kong’s exposure to U.S. financial conditions is a policy choice, and other factors have also contributed to the run-up in its property prices. House prices have also resumed their rise in China. But, as with credit growth, this rise seems to reflect domestic developments as opposed to spillovers from global financial conditions.