Japan’s third-quarter real gross domestic product expanded 0.3% year on year, snapping two straight quarters of year-on-year decline.

The GDP reading marked a reversal from the revised 1.1% decline seen in the second quarter.

The data comes against the backdrop of the Bank of Japan raising rates from 0.1% to 0.25% in July — its highest level since 2008.

Higher policy rates generally cool the economy, and vice versa. The BOJ has stated that it will continue to raise rates “if economic activity and prices develop as expected.”

On a quarter-on-quarter basis, GDP rose 0.2%, in line with Reuters poll estimates.

On an annualized basis, the economy expanded 0.9%, beating estimates of a 0.7% expansion. However, this was a sharp decline from the 2.9% rise in the quarter before.

Should economic indicators fall into place, the BOJ said it could raise rates to 1% by the second half of its 2025 fiscal year, starting from September 2025.

In October, Shigeru Ishiba, Japan’s prime minster, reportedly said that “I do not believe that we are in an environment that would require us to raise interest rates further,” after meeting with BOJ governor Kazuo Ueda.

This was in contrast to comments he made in August to Reuters, where he said the BOJ was “on the right policy track” to normalize rates.

Following the GDP data release, the benchmark Nikkei 225 rose 0.76%, while the broad-based Topix climbed 0.64%.

The Japanese yen weakened 0.16% against the U.S. dollar after the GDP announcement, trading at 156.51.

The yen has seen wild swings in the third quarter, prompting multiple rounds of verbal warnings from finance ministry officials against “excessive speculation” and even interventions by the BOJ.