Japan’s economy has shown signs of recovery in the October-December quarter as its economic output returned to full capacity for the first time in about four years. This positive outlook could lead to an interest rate hike by the central bank, according to a Bank of Japan estimate that showed the country’s output gap stood at +0.02% in the final quarter of last year, marking a significant improvement from -0.37% in the previous quarter and a positive reading after 15 quarters.

The output gap is a key indicator used by the BOJ to gauge the strength of the economy and its ability to fuel inflation. A positive output gap indicates that the economy is operating above its full capacity, reflecting strong demand. This is seen as key to wage growth and sustained inflation around the BOJ’s 2% target.

In response to this shift in focus, market watchers are now waiting for signals on when the central bank might raise interest rates again. Speculation that the BOJ may proceed cautiously with further rate hikes contributed to a weaker yen, with the currency approaching 152 to the dollar. This raised concerns about potential intervention by Japanese authorities in purchasing the yen in order to stabilize the exchange rate.

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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