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

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.

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

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.

Progressively, the skill set of the population is growing.

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