While estimates of the output gap are subject to a considerable margin of error, the gap seems to have narrowed to close to 0 percent, which is the past long-term average, reflecting the increased utilization of labor and capital (Chart 6).
As for the outlook, it is likely that the tightening of labor market conditions will become more pronounced as the economy continues to grow above its potential, and inflationary pressure from wages and the output gap is likely to steadily strengthen. I will touch on what implications this might have in the last part of my speech.