Japan’s economy fully recovers, increasing likelihood of interest rate hike – Firstpost

Japan’s Economy at Full Capacity for First Time in Four Years: A Signal to Raise Interest Rates?

Japan’s economic output has reached its full capacity for the first time in four years during the October-December quarter, a positive development that could lead to the central bank raising interest rates. The Bank of Japan released an estimate on Wednesday showing that Japan’s output gap, which measures the difference between actual and potential output, reached +0.02 percent in the final quarter of last year. This was a significant improvement from the -0.37 percent recorded in the previous quarter, marking the first positive reading in 15 quarters.

The output gap is a crucial indicator for the Bank of Japan as it monitors various economic measures to determine if the economy is experiencing strong expansion, capable of driving demand-led inflation. A positive output gap occurs when actual output exceeds full capacity, signaling strong demand. This is considered a prerequisite for increasing wages and achieving sustainable inflation around the BOJ’s 2 percent target.

In recent years, Japan has been focusing on stimulating growth with extensive monetary stimulus and ending years of negative interest rates. However, markets are closely watching for clues on when the central bank may raise interest rates again after ending eight years of negative rates in a shift away from its focus on tackling deflation. Expectations that the BOJ will proceed cautiously with further rate hikes have led to the yen weakening, approaching 152 to the dollar. This level is seen as increasing the likelihood of Japanese authorities intervening by buying yen to stabilize

Leave a Reply

Research shows that certain individuals may excel at Fortnite due to their ability to perceive in a higher FPS Previous post Unlocking the Secrets of Human Perception: Temporal Resolution and Its Impact on Gaming Performance
Nominees for Boys Wrestling in North Jersey High School Sports Awards Next post Rolling Out the Red Carpet: Boys Wrestling Stars Vie for North Jersey High School Sports Awards