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Japan's output gap, which measures the difference between an
economy's actual and potential output, stood at +0.02% in the
final quarter of last year, an estimate by the Bank of Japan
(BOJ) showed on Wednesday.
It followed a reading of -0.37% in the third quarter, and was
the first positive reading in 15 quarters.
The output gap is among data the BOJ watches closely in
determining whether the economy is expanding strongly enough to
propel a demand-driven rise in inflation.
A positive output gap occurs when actual output exceeds the
economy's full capacity, and is considered a sign of strong
demand. It is seen by analysts as one of a handful of
prerequisites for wages to rise more, and push inflation
sustainably around the BOJ's 2% target.
The BOJ ended eight years of negative interest rates and other
remnants of its unorthodox policy last month, making a historic
shift away from its focus on quashing deflation and reflating
growth with decades of massive monetary stimulus.
Markets are on the look-out for any clues on how soon the
central bank could raise interest rates again.
Expectations that the BOJ will go slow in any further rate hikes
have pushed the yen down to near 152 to the dollar, a level seen
by markets as heightening the chance of yen-buying intervention
by Japanese authorities.
(Reporting by Leika Kihara; Editing by Shri Navaratnam)
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