Fed's Interest Rate Decision and the Echoes of Trump's Victory: Latest Developments in Global Markets
Global economy continues to be shaped under the influence of interest rate decisions and political changes. While the U.S. Federal Reserve is expected to lower interest rates again, it has been reported that China is urging banks to reduce interest rates to support economic growth. Meanwhile, comments continue to emerge following Donald Trump’s victory in the presidential elections.
Fed Expected to Lower Interest Rates
The U.S. Federal Reserve (Fed) is considering lowering interest rates again in its meeting today.
Markets almost confidently anticipate that the Federal Open Market Committee will cut the benchmark borrowing cost by a quarter point. The Fed plans to recalibrate its policy in an economic environment where inflation is moderate and the labor market is easing.
China Orders Banks to Lower Interest Rates
According to Bloomberg News, Chinese regulators have asked banks to lower interbank deposit rates to stimulate the economy. It is reported that some banks are paying financial institutions rates of 1.8% or higher. Authorities aim for a more liberal release of funds with this move.
Global Economic Effects of Trump’s Presidential Victory
François Villeroy de Galhau, member of the ECB Governing Council and President of the Bank of France, noted that Donald Trump’s election as President of the U.S. implies increased downward risks for the global economy. It was mentioned that Trump’s policies could potentially lead to higher budget deficits and inflation in the U.S. This situation should serve as a wake-up call for European countries.
Economic Analysis from the Asia-Pacific Region
Michele Bullock, Governor of the Reserve Bank of Australia, stated that it is currently difficult to assess the impact of the U.S. elections on inflation. Bullock mentioned that the Reserve Bank of Australia has not changed its inflation outlook and expects inflation to return to the target band by 2026.
Andrew Irvine, CEO of National Australia Bank, suggested that Donald Trump's electoral victory could strengthen the U.S. economy but could also lead to higher interest rates persisting for a longer time, creating global economic effects.
Europe's Trade and Interest Rate Policy Moves
Luis de Guindos, Vice President of the European Central Bank, warned that the new trade barriers promised by Trump could harm global growth and lead to a vicious cycle of trade wars. De Guindos expressed that potential tariffs and protectionism could cause economic damage.
The Central Bank of Brazil raised its benchmark Selic rate by 50 basis points to 11.25%. This step indicates that the bank is accelerating its tightening policies.
Expectations for Interest Rate Hikes and Wage Policies from Japan
Expectations for a rate increase by the Bank of Japan in December have strengthened due to recent wage data. Takayuki Miyajima, an economist at Sony Financial Group, noted that planned cash earnings in Japan increased by 2.6%. Daiwa Securities strategist Ryoma Kawahara stated that the weakening of the Japanese yen after Trump's victory has bolstered the likelihood of the Bank of Japan raising rates in the short term.