Fed still unlikely to cut rates more than once in 2025, says CIO
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Reuters
20 minutes ago
- Reuters
Some in BOJ saw scope to hike rates if trade friction eases, June minutes show
TOKYO, Aug 5 (Reuters) - Some Bank of Japan policymakers saw scope to resume interest rate increases once trade friction caused by U.S. tariffs eased, minutes of the bank's June meeting showed, a sign Tokyo's recent trade deal with Washington cleared a key hurdle for more hikes. At the June meeting, many members said the central bank must keep interest rates steady due to downside risks to the economy from U.S. tariffs, the minutes showed on Tuesday. But they also saw inflation overshooting expectations, with some warning that recent rises in food costs could affect public perceptions on future inflation, the minutes showed. "Given high uncertainties, the BOJ would likely pause rate hikes for the time being. But it also must respond flexibly and nimbly, and return to a rate-hike phase depending on U.S. policy developments," one member was quoted as saying. Another member said the BOJ might need to raise rates decisively even when uncertainty remained high, given the fact inflation remained higher than expected. "As wages had been solid and prices had been slightly higher than expected, the Bank would likely shift away from the current wait-and-see approach and consider resuming rate hikes, if trade friction de-escalates," a few members were quoted as saying. The remarks highlight the board's growing attention to upside inflation risks, which led the BOJ to signal its readiness to keep raising rates even as U.S. tariffs clouded the economic outlook. At the June 16-17 meeting, the BOJ kept interest rates steady at 0.5% and decided to decelerate the pace of its balance sheet drawdown next year, signalling its preference to move cautiously in removing remnants of its massive stimulus. The impact of U.S. tariffs was the focus of debate at the June meeting, which was held before Japan clinched a trade deal with the U.S. in July and won cuts to hefty tariffs. While one member cautioned that it would take some time to gauge the impact of U.S. tariffs on corporate earnings, some said the hit to growth from the higher levy could be smaller than initially expected, the minutes of the June meeting showed. Japanese companies appear to have shed their long-held view that wages and prices must be kept low, one member said, adding the focus would be whether firms would keep hiking pay even if their profits are squeezed by U.S. tariffs. "I'm paying attention to the fact we're seeing home-made inflation emerge, as seen in rising wages driven by labour shortages," another member was quoted as saying. In deciding on next year's bond taper plan, some in the board also saw the need to scrutinise the desirable size of the BOJ's balance sheet in the long run, the minutes showed. While one member said it was desirable for the BOJ to eventually reduce monthly bond buying to zero, another said a cut to around 1 trillion yen ($6.8 billion) would suffice, the minutes said. The central bank is currently tapering bond buying so that monthly purchases slow to around 3 trillion yen by March 2026. In an extended taper plan decided in June, the BOJ expects monthly purchases fall to around 2 trillion yen by March 2027. The BOJ kept interest rates steady at a subsequent meeting on July 30-31. But it revised up its inflation forecasts and offered a less gloomy outlook on the economy, keeping alive the possibility of a resumption in rate hikes this year. ($1 = 146.9900 yen)
Reuters
20 minutes ago
- Reuters
Shares in Asia rally, dollar lower against yen on Fed rate cut bets
TOKYO, Aug 5 (Reuters) - Shares in Asia rose for a second consecutive session and the U.S. dollar held most of its losses on Tuesday as investors increased bets the Federal Reserve will act to prop up the world's largest economy. U.S. shares rallied on Monday on generally positive earnings reports and increasing bets for a September rate cut from the Fed after disappointing jobs data on Friday. Oil remained lower after output increases by OPEC+ and threats by U.S. President Donald Trump to raise tariffs on India over its Russian petroleum purchases. Japan's Nikkei rallied, with data showing a jump in the nation's service sector activity in July. "There are signs of weakness in parts of the U.S. economy, that plays to the view that maybe not in September, but certainly this year that the Fed's still on course to ease potentially twice," said Rodrigo Catril, senior currency strategist at National Australia Bank. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.6% in early trade. The Nikkei climbed 0.5% after falling by the most in two months on Monday. The dollar dropped 0.1% to 146.96 yen . The euro was unchanged at $1.1572, while the dollar index , which tracks the greenback against a basket of major peers, edged up 0.1% after a two-day slide. Odds for a September rate cut now stand at about 94%, according to CME Fedwatch, from a 63% chance seen on July 28. Market participants see at least two quarter-point cuts by the end of this year. The disappointing nonfarm payrolls data on Friday added to the case for a cut by the Fed, and took on another layer of drama with Trump's decision to fire the head of labor statistics responsible for the figures. News that Trump would get to fill a governorship position at the Fed early also added to worries about politicisation of interest rate policy. Trump again threatened to raise tariffs on goods from India from the 25% level announced last month, over its Russian oil purchases, while New Delhi called his attack "unjustified" and vowed to protect its economic interests. Second-quarter U.S. earnings season is winding down, but investors are still looking forward to reports this week from companies including Walt Disney (DIS.N), opens new tab and Caterpillar (CAT.N), opens new tab. Tech heavyweights Nvidia (NVDA.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Meta (META.O), opens new tab surged overnight, and Palantir Technologies (PLTR.O), opens new tab raised its revenue forecast for the second time this year on expectations of sustained demand for its artificial intelligence services. "Company earnings announcements continue to spur market moves," Moomoo Australia market strategist Michael McCarthy said in a note. In Japan, the S&P Global final services purchasing managers' index climbed to 53.6 in July from 51.7 in June, marking the strongest expansion since February. Oil prices were little changed after three days of declines on mounting oversupply concerns, with the potential for more Russian supply disruptions providing support. Brent crude futures were flat at $68.76 per barrel, while U.S. crude futures dipped 0.02% to $66.28 a barrel. Spot gold was slightly higher at $3,381.4 per ounce. The pan-region Euro Stoxx 50 futures were up 0.2%, while German DAX futures were up 0.3% and FTSE futures rose 0.4%. U.S. stock futures, the S&P 500 e-minis , were up 0.2%. Bitcoin was little changed at $114,866.06 after a two-day rally.
The Independent
an hour ago
- The Independent
House Bill 395 aims to protect employers from those who skip job interviews
Ohio House Bill 395 proposes the creation of an online registry for individuals who fail to attend job interviews without notice. The bill aims to protect employers and state unemployment services by promoting accountability and preventing the waste of taxpayer money. Ohio Representative Brian Lorenz, a co-sponsor, argues the bill is 'common sense' and necessary to bring accountability back to the system. Opponents, including Senate Democrat Bill DeMora, contend that existing Ohio laws already address unemployment requirements and the bill could unfairly penalize those in emergency situations. While the Department of Job and Family Services currently has a system for reporting interview no-shows, proponents of the bill seek a more streamlined process.
