• Thu. Apr 25th, 2024

Japan’s Economic Output Returns to Full Capacity, Signaling a Positive Outlook and Potential Interest Rate Increase by BOJ

BySamantha Nguyen

Apr 3, 2024
Japan’s economy fully rebounds, maintaining potential for BOJ interest rate hike

Japan’s economic output returned to full capacity for the first time in about four years in the October-December quarter, signaling a positive outlook that could lead to an increase in interest rates by the central bank. The Bank of Japan’s estimate showed that the country’s output gap, which measures the difference between actual and potential output, was at +0.02% in the final quarter of last year. This marked a significant improvement from the -0.37% reading in the previous quarter and was the first positive reading in 15 quarters.

The output gap is a key indicator that the BOJ uses to assess the strength of the economy and its ability to drive inflation. A positive output gap indicates that the economy is operating above its full capacity, reflecting strong demand. This is considered essential for wage growth and sustained inflation around the BOJ’s 2% target.

The BOJ recently ended eight years of negative interest rates and other unconventional policies, shifting its focus towards promoting growth and inflation. Market watchers are now awaiting signals on when the central bank might decide to raise interest rates again. Speculation that the BOJ may proceed cautiously with further rate hikes has contributed to a weaker yen, with

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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