The bank is strongly and immediately sending the signal that financial conditions may need to be made tighter.

It's unambiguously good news for Japan. It signals the dark days of deflation are behind us.

Progressively, the skill set of the population is growing.

These reports are clear evidence that the consumer caution that drove the slowing in the economy in the second half of 2005 is on the wane.

Exports are starting to firm, which is lending support to industrial production.

When we look at investment, it appears to be structurally too low. The political tension will hold down the Taiwan dollar too.

When we look at the economic fundamentals in Japan, and how they've unfolded in the last six months, we're clearly seeing an economy that is growing above potential.

Today's numbers highlight the inappropriateness of rate-cut expectations.

Given gasoline is such a small component of the household basket in Japan, it should be having an almost negligible impact on sentiment.