Japan avoids recession paving way for BOJ rate hike
Japan has narrowly avoided a recession, clearing the way for a Bank of Japan (BOJ) rate hike.
The country’s GDP grew by 0.1% in Q4 quarter-over-quarter after a 0.8% contraction in Q3, helped by a strong upward revision of capital expenditure. The Yen, meanwhile, has been strengthening against the US dollar, which weighed on Japan's equity market. A growing number of Bank of Japan policymakers are now warming to the idea of ending negative interest rates this month. The bank is set to decide on rates on 19 March, as IGTV’s Angela Barnes explains.
(AI Video Summary)
Japanese economy
In Japan, the economy grew slightly in the fourth quarter after a decline in the previous quarter. This was due to businesses investing more money into things like buildings and equipment. However, the value of the Japanese currency, the yen, has been increasing compared to the US dollar. This has caused problems for Japanese companies that do business internationally. To help with this, the Bank of Japan is considering keeping interest rates low. Meanwhile, the US dollar has been losing value because people think the US central bank will lower interest rates soon. This, in turn, has made the Japanese yen even stronger. As a result, Japan's stock market has been going down, especially technology stocks. Recently, the stock market reached its highest point ever, but it has since lost about 0.28% of its value.
The US dollar
To put it simply, Japan's economy improved a little bit, but the strong yen caused some issues. The US dollar also went down, and this affected Japan's stock market negatively.
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