The Bank of Japan's output gap estimates for the first quarter showed a stable positive trend, a mechanism that helps drive inflation higher, says SMBC Nikko Securities economist Yoshimasa Maruyama. The reading could be seen as justifying further interest rate hikes, he says. However, the size of the positive gap didn't expand, suggesting there is little immediate need to accelerate monetary tightening, he adds. "Any future need to speed up the pace or increase the scale of additional rate hikes would likely stem from a lagged but pronounced pass-through of inflationary pressures caused by the Middle East situation or rising inflation expectations." (megumi.fujikawa@wsj.com)
Dow Jones Newswires
Japan's Positive Output Gap Likely to Justify More Rate Hikes — Market Talk
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The Bank of Japan's output gap estimates for the first quarter showed a stable positive trend, a mechanism that helps drive inflation higher, says SMBC Nikko Securities economist Yoshimasa Maruyama. The reading could be seen as justifying further interest rate hikes, he says. However, the size of t…