Here is an indicator you might not have seen supporting the BOJ’s QE exit discussion

The Bank of Japan published its latest estimates of potential output and the output gap yesterday

This is an indicator of economic growth and, more specifically, how growth is outstripping 'potential growth' (I'm simplifying).

The BOJ says potential growth is now running at 0.88% y/y (citing rising capital stock and productivity growth). This compares with actual GDP growth running ahead of that, which puts the output gap around 1.5% (for Q4 2017).

This is the highest for a decade or so and its what should drive inflation higher (which, obviously, is taking some time ... but it is edging higher)

(Justin posted a couple of days back on:

• BOJ is internally discussing exit
  BOJ is doing internal debate on exit strategy )

A BOJ exit should be yen supportive ... but its nowhere in sight for now.