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MNI POLICY: BOJ: Japan Q2 Output Gap Widens To +1.86 PPs

MNI (London)
     TOKYO (MNI) - Japan's estimated positive output gap resulting from tighter
supply and firmer demand widened to 1.86 percentage points in the April-June
quarter from 1.63 percentage points in January-March, the Bank of Japan said
Wednesday.
     --It was the seventh straight quarter of the output gap being in positive
territory, with the improvement expected to increase upward pressure on consumer
prices and inflation expectations with a lag of a few quarters.
     --The BOJ's estimate of the output gap, which is based on capital and
labour stocks, was wider than the Cabinet Office's latest estimate at 0.5%
percentage point, a figure based on revised Q2 GDP growth of +0.7% on quarter,
or an annualized +3.0%, and up from +0.1% point for the January-March period.
     --The BOJ also said Wednesday that Japan's potential growth rate for a
six-month period from April to June 2018 was estimated to be 0.78%, down from
0.81% for the October 2017-March 2018 period. It was within the bank's latest
estimate in a range of 0.5% to 1.0% which was provided in the July Outlook
Report.
     --The Cabinet Office estimates Japan's potential growth rate to be about
1.1% in the April-June quarter, unchanged from the previous three months.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MAJDS$,MMJBJ$,M$A$$$,M$J$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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