Japan's Economic Growth Fuels Rate Hike Speculation

Japan's economy experienced growth in Q3 due to revised capital investment and exports. Though the central bank might consider a rate hike, sluggish consumption casts doubt on its timing. GDP grew by 1.2% annually, with revised GDP data showing a smaller drop in investment than expected.

Japan's economy accelerated in the third quarter, with growth figures revised upward due to better-than-expected capital investment and exports. This fueled market speculation about a potential interest rate hike by the central bank. However, with weak consumption figures, the future of the economic recovery remains uncertain.

The Bank of Japan is set to scrutinize the data in its upcoming policy meeting, where analysts anticipate a possible increase in short-term interest rates from the current 0.25%. While some economists believe the data supports a December rate hike, concerns over weak consumption persist.

The revised data reveals a 1.2% annual rise in GDP from July to September, surpassing initial estimates. Although capital expenditure saw minimal decline, private consumption increased by just 0.7%, reflecting economic fragility. As external risks loom, the central bank remains cautious on the timing of future rate hikes.

(With inputs from agencies.)