However, these trends are not sustainable as the economic and business cycles accompanied by changing interest rate environment eventually both global and based on domestic market fundamentals are a reality and call for the banks to be thinking of their long term interests.
Going forward, Japan’s positive output gap is expected to widen further on the back of (1) an improvement in capital utilization rates brought about by the increase in exports and production, and (2) a tightening of labor market conditions due to the effects of various economic stimulus measures taking hold.