• Sun. Apr 14th, 2024

Japan’s Economic Output Reaches Full Capacity for the First Time in Four Years: Could Central Bank Raise Interest Rates?

BySamantha Nguyen

Apr 3, 2024
Japan’s economy fully recovers, increasing likelihood of interest rate hike – Firstpost

Japan’s economic output has reached full capacity for the first time in four years during the October-December quarter, a promising development that could lead to the central bank raising interest rates. The Bank of Japan released its 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.

The Bank of Japan recently ended eight years of negative interest rates in a shift away from its focus on tackling deflation and stimulating growth with extensive monetary stimulus. Markets are keenly watching for clues on when the central bank may raise interest rates again. Expectations that the BOJ will proceed cautiously with further rate hikes have led to the yen weakening, approaching 152 to

By Samantha Nguyen

As a content writer at newsskio.com, I weave words to craft compelling narratives that captivate readers and bring stories to life. With a keen eye for detail and a passion for storytelling, I strive to create engaging and informative content that resonates with our audience. Whether I'm delving into the latest news trends or exploring unique angles on various topics, my goal is to deliver quality content that informs, entertains, and inspires. Join me on this journey as we uncover the news stories that matter most.

Leave a Reply