• Sat. Apr 20th, 2024

Japan’s Economic Output Reaches Full Capacity for First Time in Four Years: Central Bank Raises Interest Rate Hopes

BySamantha Jones

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

Japan’s economic output 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. 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, which measures the difference between actual and potential output, reached +0.02 percent in the final quarter of last year.

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 the dollar. This level is seen as increasing

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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