Japan’s economy has shown signs of recovery in the October-December quarter, with economic output returning to full capacity for the first time in about four years. This positive development may indicate that the central bank, the Bank of Japan (BOJ), will reconsider raising interest rates. The BOJ’s estimate showed that the output gap, which measures the difference between actual and potential output of the economy, was at +0.02% in the last quarter of last year. This marks a significant improvement from -0.37% in the previous quarter and is the first positive reading in 15 quarters.

The output gap is a key factor that the BOJ is closely watching to determine whether the economy is expanding strongly enough to boost demand and inflation. A positive output gap occurs when actual output exceeds the full capacity of the economy, indicating strong demand. Analysts see this as a prerequisite for wage increases and sustainable inflation around the BOJ’s 2% target.

Following the BOJ’s decision to end negative interest rates and shift from a focus on deflation to economic growth, markets are awaiting any indication of when the central bank might raise interest rates again. However, there are concerns that the BOJ may take a cautious approach to further interest rate hikes, which has seen the yen weaken to around 152 against the dollar.

This level is considered to increase the probability of intervention by Japanese authorities in buying yen. A stronger yen could lead to more capital inflows to countries like Malaysia, experts say. Overall, investors and analysts are closely watching Japan’s positive economic data and policy decisions due to their potential impact on global markets.

In conclusion, Japan’s economic output returning full capacity for four years during October-December quarter may signal that central bank Bank of Japan (BOJ) will reconsider raising interest rates. The BOJ closely watches key factors such as output gap which measures difference between actual and potential output of economy; a positive reading indicates strong demand leading towards wage increases and sustainable inflation around 2%. Following BOJ’s decision to end negative interest rates and shift focus on economic growth; markets are waiting for any indication when central bank might raise interest rates again but there are concerns about taking a cautious approach towards further hikes as it has weakened yen which leads higher probability of intervention by Japanese authorities buying yen; this strengthened yen could lead more capital inflows into other countries like Malaysia experts say . Investors & analysts closely watch these data & policy decisions due their potential impact on global market

By Samantha Johnson

As a dedicated content writer at newspuk.com, I immerse myself in the art of storytelling through words. With a keen eye for detail and a passion for crafting engaging narratives, I strive to captivate our audience with each piece I create. Whether I'm covering breaking news, delving into feature articles, or exploring thought-provoking editorials, my goal remains constant: to inform, entertain, and inspire through the power of writing. Join me on this journalistic journey as we navigate through the ever-evolving media landscape together.

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