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

In the final quarter of last year, Japan’s economic output returned to full capacity for the first time in about four years, signaling a positive outlook that could lead to an increase in interest rates by the central bank. 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 the currency nearing 152 to the dollar. This has raised concerns about potential yen-buying intervention by Japanese authorities to stabilize the exchange rate.

In conclusion, Japan’s economic output returning to full capacity for the first time in about four years is a positive sign for both Japan’s economy and investors looking for potential growth opportunities in Asia-Pacific region. With this development, Japan is moving away from unconventional monetary policies towards more conventional ones which will help it promote sustainable growth and maintain stable inflation levels around its 2% target

By Samantha Jones

As a dedicated content writer at newsaca.com, I bring a unique blend of creativity and precision to my work. With a passion for storytelling and a keen eye for detail, I strive to craft engaging and informative articles that captivate our readers. From breaking news to thought-provoking features, I am committed to delivering content that resonates with our audience and keeps them coming back for more. Join me on this exciting journey as we explore the ever-evolving world of news and information together.

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