MNI BRIEF: Japan Q4 Output Gap Posts Positive Figure - BOJ

The Bank of Japan estimated Japan's output gap at +0.02% in Q4, its first positive print in 15 quarters following -0.37% in Q3, indicating upward pressure on prices is increasing with a time lag, data released Wednesday showed.

The BOJ's read of the output gap, based on capital and labour stocks, is smaller than the Cabinet Office's last estimate of -0.6% in Q4 (vs. -0.5% in Q3), which is only based on second preliminary Q4 GDP data showing a 0.1% rise q/q, or an annualised rate of +0.4%.

The BOJ also said that Japan's potential growth rate for the October-December 2023 period was estimated at 0.68%, up from 0.64% for the April-September period of 2023.

The BOJ may look at policy action at its upcoming April meeting should services inflation remain high. (See MNI POLICY: April Services Data Key For Further BOJ Rate Move)