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SGH Macro Advisors produces concise, forward-looking proprietary reports on the major central banks and on key economic and policy developments that drive global bond, equity, and currency markets.
Founded in 2009, SGH has over the years built a reputation as a thought leader and source of well-informed, cutting-edge information, analysis, and insight on policy and financial markets. Its briefings and reports are highly valued by many of the world’s most well-known and influential hedge funds, money managers, and policymakers.
Highlights
SGH reports are highly valued for keeping clients and policymakers informed and well-ahead of market consensus.
May 29, 2025
SGH Insight
A surprise spike in Canada’s key underlying inflation measures have likely given the Bank of Canada (BOC) pause in contemplating whether to cut rates again next week even though the direction for short term rates remains down.
The reversal in prices complicates the BOC’s task to keep providing support to its softening economy and will test BOC Governor Tiff Macklem’s recent insistence that ultimately, the Bank must ensure confidence in price stability.
In our last report, (see SGH 5/6/25; “BOC: Trade Talks Keep Rate Cut In Play), we argued the Bank would need to ease another 75 bps this year to offset a potential recession and that remains our base case.
But the prospect of a near term June 4 cut looks iffy now given the inflation data and the Bank’s current strategy to be less preemptive with rate moves, less forward looking but pledge to act decisively once an economic direction is more obvious.
Market Validation
The reversal in prices complicates the BOC’s task to keep providing support to its softening economy and will test BOC Governor Tiff Macklem’s recent insistence that ultimately, the Bank must ensure confidence in price stability.
In our last report, (see SGH 5/6/25; “BOC: Trade Talks Keep Rate Cut In Play), we argued the Bank would need to ease another 75 bps this year to offset a potential recession and that remains our base case.
But the prospect of a near term June 4 cut looks iffy now given the inflation data and the Bank’s current strategy to be less preemptive with rate moves, less forward looking but pledge to act decisively once an economic direction is more obvious.
Dow Jones -- OTTAWA 6/4/25
The Bank of Canada on Wednesday left its main interest
rate unchanged, at 2.75%, saying the economy has softened but not
deteriorated, and inflation has picked up steam.
Bank of Canada Gov. Tiff Macklem said senior officials expect second-growth
output to be "much weaker" after a surprise 2.2% annualized increase in the
first quarter, which was buoyed by exports and inventories as companies rushed
to purchase goods to avoid tariffs. While there was a consensus among senior
officials on the central bank's governing council to keep the interest rate
steday, Macklem said officials also agreed that another rate cut might be
needed should the economy stall due to uncertainty fueled by U.S. trade
policy.
The Bank of Canada on Wednesday left its main interest
rate unchanged, at 2.75%, saying the economy has softened but not
deteriorated, and inflation has picked up steam.
Bank of Canada Gov. Tiff Macklem said senior officials expect second-growth
output to be "much weaker" after a surprise 2.2% annualized increase in the
first quarter, which was buoyed by exports and inventories as companies rushed
to purchase goods to avoid tariffs. While there was a consensus among senior
officials on the central bank's governing council to keep the interest rate
steday, Macklem said officials also agreed that another rate cut might be
needed should the economy stall due to uncertainty fueled by U.S. trade
policy.
May 21, 2025
SGH Insight
Different ECB officials have differing views on where the neutral rate dividing line into accommodative territory might lie, with most estimates around 2%, and all can agree that it is a range and not a point estimate. But in the real economy, there is no data on the transmission and credit side to indicate that even the current 2.25% deposit rate level is restricting economic activity in any meaningful way.
In other words, the evidence reinforces that we are already in that neutral range. Under this setup, unless clearly needed, deeper cuts into a 1% handle would come with diminishing returns and take valuable policy space for a more significant downside demand shock should that materialize. Therefore, as things stand, the rate path from here should be seen as a one or two cut risk management exercise to mitigate a potential temporary undershooting of inflation, rather than a response to deeper slowdown and undershoot concerns which would necessitate more forceful easing.
Market Validation
In other words, the evidence reinforces that we are already in that neutral range. Under this setup, unless clearly needed, deeper cuts into a 1% handle would come with diminishing returns and take valuable policy space for a more significant downside demand shock should that materialize. Therefore, as things stand, the rate path from here should be seen as a one or two cut risk management exercise to mitigate a potential temporary undershooting of inflation, rather than a response to deeper slowdown and undershoot concerns which would necessitate more forceful easing.
Dow Jones 5/27/25
The European Central Bank is unlikely to lower its key interest rate below 1.5% or in large steps, its chief economist said in an interview published Tuesday.
The ECB last month lowered its key rate for a seventh time since June 2024 to 2.25%. Policymakers will meet next week and investors expect them to cut again, to 2%.
In an interview with German newspaper Frankfurter Allgemeine Zeitung conducted on May 20, Philip Lane said that further cuts are likely if policymakers see signs of a further declines in inflation, which has fallen close to the 2% target.
"If we see signs of further falling inflation, we will respond with further interest rate cuts--but the range of discussion is not that wide: no one is talking about dramatic rate cuts," he said.
However, Lane said there is a limit to how far the ECB would likely go in lowering borrowing costs to support the economy and lift inflation, unless there is a significant weakening of the eurozone economy.
"Rates below 1.5 per cent are clearly accommodative," he said. "Going there would only be appropriate in the event of more substantial downside risks to inflation, or a more significant slowdown in the economy. I do not see that at the moment."
The European Central Bank is unlikely to lower its key interest rate below 1.5% or in large steps, its chief economist said in an interview published Tuesday.
The ECB last month lowered its key rate for a seventh time since June 2024 to 2.25%. Policymakers will meet next week and investors expect them to cut again, to 2%.
In an interview with German newspaper Frankfurter Allgemeine Zeitung conducted on May 20, Philip Lane said that further cuts are likely if policymakers see signs of a further declines in inflation, which has fallen close to the 2% target.
"If we see signs of further falling inflation, we will respond with further interest rate cuts--but the range of discussion is not that wide: no one is talking about dramatic rate cuts," he said.
However, Lane said there is a limit to how far the ECB would likely go in lowering borrowing costs to support the economy and lift inflation, unless there is a significant weakening of the eurozone economy.
"Rates below 1.5 per cent are clearly accommodative," he said. "Going there would only be appropriate in the event of more substantial downside risks to inflation, or a more significant slowdown in the economy. I do not see that at the moment."
May 23, 2025
SGH Insight
In a classic central bank “catch 22,” the latest market ructions have stalled BOJ rate hikes for the time being, after the Bank warned earlier this month that global trade unrest and tariffs forced it to downgrade its growth forecasts for 2025 and 2026. On May 1, the central bank held rates unchanged at 0.5% and extended its timeline for hitting its 2% inflation “sustainably”.
But the BOJ will have to hike in the next few months. The steepening yield curve is tightening monetary conditions for the BOJ, at a time when households and firms already are under pressure from higher inflation and stubbornly stagnant real incomes. Market pricing is telling the BOJ that it needs to raise rates to contain inflation, even if that conflicts with Ministry of Finance’s (MOF) desire to minimize the cost of financing Japan’s debt.
That said, the BOJ will stand pat again at its June meeting and likely will want to see market liquidity conditions improving and a few better auction results before it will be willing to hike again.
Market Validation
But the BOJ will have to hike in the next few months. The steepening yield curve is tightening monetary conditions for the BOJ, at a time when households and firms already are under pressure from higher inflation and stubbornly stagnant real incomes. Market pricing is telling the BOJ that it needs to raise rates to contain inflation, even if that conflicts with Ministry of Finance’s (MOF) desire to minimize the cost of financing Japan’s debt.
That said, the BOJ will stand pat again at its June meeting and likely will want to see market liquidity conditions improving and a few better auction results before it will be willing to hike again.
Bloomberg 5/27/25
Bank of Japan Governor Kazuo Ueda gave the yen a boost by clearly indicating his intention to continue raising the benchmark interest rate if the economy improves as expected.
“We will adjust the degree of monetary easing as needed” to ensure that the bank achieves its sustainable price goal if incoming data give authorities greater confidence that their economic expectations will be met, Ueda said in a speech at an international conference hosted by the BOJ in Tokyo Tuesday.
The yen rose as high as 142.12 against the dollar shortly after his remarks.
Bank of Japan Governor Kazuo Ueda gave the yen a boost by clearly indicating his intention to continue raising the benchmark interest rate if the economy improves as expected.
“We will adjust the degree of monetary easing as needed” to ensure that the bank achieves its sustainable price goal if incoming data give authorities greater confidence that their economic expectations will be met, Ueda said in a speech at an international conference hosted by the BOJ in Tokyo Tuesday.
The yen rose as high as 142.12 against the dollar shortly after his remarks.
May 23, 2025
SGH Insight
Markets have been slammed this morning by Trump’s threat to hike tariffs on the European Union to 50%. That tweet reflects intense frustration in Washington at the slow, combative, and lecturing tone from the EU on tariff negotiations. Here is the state of play, and at the end, a brief quick take on market implications.
We have repeatedly flagged the EU position on tariff negotiations as a problem, despite news articles touting optimism and so on.
Looking forward, and in the spirit of constructive feedback to European policymakers, we would suggest that the EU consider pulling a political heavyweight into tariff negotiations to reinforce the European Commission chiefs who have limited instructions, and in Treasury Secretary Scott Bessent’s words, suffer from “a collective action problem.”
The natural candidate for that would of course be EC President Ursula von der Leyen.
Market Validation
We have repeatedly flagged the EU position on tariff negotiations as a problem, despite news articles touting optimism and so on.
Looking forward, and in the spirit of constructive feedback to European policymakers, we would suggest that the EU consider pulling a political heavyweight into tariff negotiations to reinforce the European Commission chiefs who have limited instructions, and in Treasury Secretary Scott Bessent’s words, suffer from “a collective action problem.”
The natural candidate for that would of course be EC President Ursula von der Leyen.
Bloomberg 5/26/25
President Donald Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9 after a phone call with Commission President Ursula von der Leyen.
“We had a very nice call and I agreed to move it,” Trump told reporters Sunday at Morristown Airport in New Jersey on his way back to Washington.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
President Donald Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9 after a phone call with Commission President Ursula von der Leyen.
“We had a very nice call and I agreed to move it,” Trump told reporters Sunday at Morristown Airport in New Jersey on his way back to Washington.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
May 14, 2025
SGH Insight
That US trade negotiators led by Treasury are not seeking currency pledges (even if currencies might be discussed) is also wholly consistent with what we heard and was publicly reported by the Japanese, to their surprise, after discussions with Treasury Secretary Scott Bessent.
Finally, this episode and subsequent clarification is also consistent with the following, that we wrote in a report on April 9:
While the 2018 landscape [of a rising dollar with tariffs] was markedly different than today, we expect Bessent will still want to disabuse the market of the notion that the administration is pursuing a “Mar-a-Lago” policy of significant devaluation of the dollar as outlined in a piece written by Stephen Miran, the now Chair of the Council of Economic Advisors, shortly before last year’s presidential election.
Now, Bessent has also noted, on many occasions, that there is no single “dollar” rate, and indeed the bilateral FX rates often reflect significant variances in economic, political, rate differential, and flow dynamics.
Market Validation
Finally, this episode and subsequent clarification is also consistent with the following, that we wrote in a report on April 9:
While the 2018 landscape [of a rising dollar with tariffs] was markedly different than today, we expect Bessent will still want to disabuse the market of the notion that the administration is pursuing a “Mar-a-Lago” policy of significant devaluation of the dollar as outlined in a piece written by Stephen Miran, the now Chair of the Council of Economic Advisors, shortly before last year’s presidential election.
Now, Bessent has also noted, on many occasions, that there is no single “dollar” rate, and indeed the bilateral FX rates often reflect significant variances in economic, political, rate differential, and flow dynamics.
Bloomberg 5/22/25
US and Japanese finance chiefs confirmed
existing currency views and did not discuss foreign exchange
levels during a meeting in Canada, sending the yen briefly lower
as markets wound back expectations for a more aggressive stance.
Treasury Secretary Scott Bessent and Japanese Finance
Minister Katsunobu Kato “reaffirmed their shared belief that
exchange rates should be market determined and that, at present,
the dollar-yen exchange rate reflects fundamentals,” the
Treasury department said Wednesday.
US and Japanese finance chiefs confirmed
existing currency views and did not discuss foreign exchange
levels during a meeting in Canada, sending the yen briefly lower
as markets wound back expectations for a more aggressive stance.
Treasury Secretary Scott Bessent and Japanese Finance
Minister Katsunobu Kato “reaffirmed their shared belief that
exchange rates should be market determined and that, at present,
the dollar-yen exchange rate reflects fundamentals,” the
Treasury department said Wednesday.
May 9, 2025
SGH Insight
The Reserve Bank of Australia (RBA) is on track to cut interest rates by another 25 basis points this month to 3.85%, providing support for the economy alongside fiscal relief promised by Prime Minister Anthony Albanese, who secured a second historic term last weekend.
Market Validation
Financial Review 5/20/25
The Reserve Bank of Australia has cut the cash rate to 3.85 per cent and
downgraded its key economic forecasts over concerns Donald Trump’s trade war
will cause consumers to save more and force businesses to rethink investment
plans.
The Reserve Bank of Australia has cut the cash rate to 3.85 per cent and
downgraded its key economic forecasts over concerns Donald Trump’s trade war
will cause consumers to save more and force businesses to rethink investment
plans.
May 18, 2025
SGH Insight
The Fed remains in a holding pattern. The economy remains sufficiently strong that the Fed confidently believes it can hold policy steady until it assesses the impact of tariffs on inflation, data it doesn’t anticipate having until later this year. Optimally, the Fed hopes it can hold steady until it can fully assess the totality of policies pursued by the Trump administration. Given limited data between now and the July FOMC meeting, we don’t expect the Fed will be positioned to consider adjusting policy rates before the September FOMC meeting.
Market Validation
Bloomberg 5/19/25
Federal Reserve Bank of New York President John Williams said policymakers may need months to get a better understanding of the outlook for the economy.
“It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said Monday at a conference organized by the Mortgage Bankers Association. “It’s going to be a process of collecting data, getting a better picture, and watching things as they develop.”
Williams continued to stress that uncertainty was hindering not only policymakers, but also firms and households as they struggle to predict how tariffs and other policies from the Trump administration will reshape the US economy.
Federal Reserve Bank of New York President John Williams said policymakers may need months to get a better understanding of the outlook for the economy.
“It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said Monday at a conference organized by the Mortgage Bankers Association. “It’s going to be a process of collecting data, getting a better picture, and watching things as they develop.”
Williams continued to stress that uncertainty was hindering not only policymakers, but also firms and households as they struggle to predict how tariffs and other policies from the Trump administration will reshape the US economy.
April 23, 2025
SGH Insight
The Trump Administration looks to be making some course corrections on trade, the Fed, and DOGE. These will help take some tail risk out of the economy, although with trade between the two economic giants crawling to a standstill the US and China need to move quickly on negotiations. While there were rumors last night of a scheduled call already for May between US President Donald Trump and China’s President Xi Jinping, we think these are well ahead of the news cycle and there needs to be progress on the technical levels before a call can take place. Directionally, however, it is pointing in the right way.
As a reminder, our core position is that the reciprocal tariffs will be largely rolled back though a 10% tariff baseline will stick and there will be additional tariffs on intermediate goods like steel and aluminum.
Market Validation
As a reminder, our core position is that the reciprocal tariffs will be largely rolled back though a 10% tariff baseline will stick and there will be additional tariffs on intermediate goods like steel and aluminum.
Bloomberg News 5/12/25
The US and China will temporarily lower tariffs on each other’s products, according to a joint statement released in Geneva, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.
The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to the statement and officials in a briefing Monday.
“We had a very robust and productive discussion on steps forward on fentanyl,” Treasury Secretary Scott Bessent said. “We are in agreement that neither side wants to decouple.”
The statement also said “the parties will establish a mechanism to continue discussions about economic and trade relations.”
The announcement represents a step toward de-escalating a tariff war that has led to an immediate slump in trade across the Pacific Ocean. The two countries had earlier reported “substantial progress” in their talks, which buoyed markets and helped Chinese stocks recoup their losses since President Donald Trump’s “Liberation Day” announcement of tariffs on April 2.
The US and China will temporarily lower tariffs on each other’s products, according to a joint statement released in Geneva, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.
The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to the statement and officials in a briefing Monday.
“We had a very robust and productive discussion on steps forward on fentanyl,” Treasury Secretary Scott Bessent said. “We are in agreement that neither side wants to decouple.”
The statement also said “the parties will establish a mechanism to continue discussions about economic and trade relations.”
The announcement represents a step toward de-escalating a tariff war that has led to an immediate slump in trade across the Pacific Ocean. The two countries had earlier reported “substantial progress” in their talks, which buoyed markets and helped Chinese stocks recoup their losses since President Donald Trump’s “Liberation Day” announcement of tariffs on April 2.
May 7, 2025
SGH Insight
Steady as She Goes
Bottom Line: The Fed is stuck in place until it has greater clarity on the impacts of tariffs and the direction of the economy. We think the Fed’s next move will be to cut rates, but it’s a timing game. The economy will likely continue to cool more slowly than market participants have feared. If that remains the case, the Fed will continue to delay rate cuts. From our perspective, it is more likely that a preponderance of evidence to support a rate cut can build by the September rather than July FOMC meeting. The Fed would also have the luxury of using Jackson Hole to reset the narrative ahead of any rate change. This could be shaping up just like 2024.
Market Validation
Bottom Line: The Fed is stuck in place until it has greater clarity on the impacts of tariffs and the direction of the economy. We think the Fed’s next move will be to cut rates, but it’s a timing game. The economy will likely continue to cool more slowly than market participants have feared. If that remains the case, the Fed will continue to delay rate cuts. From our perspective, it is more likely that a preponderance of evidence to support a rate cut can build by the September rather than July FOMC meeting. The Fed would also have the luxury of using Jackson Hole to reset the narrative ahead of any rate change. This could be shaping up just like 2024.
Wall Street Journal 5/12/25
A near-term cut to benchmark interest rates looks less likely after a thawing in trade relations between the U.S. and China.
-- There is now a 57% chance the Federal Reserve holds rates steady through its next two meetings, CME FedWatch data shows.
-- That's up from 40% as of Friday, according to the data, which is based on futures tied to the fed-funds rate.
A near-term cut to benchmark interest rates looks less likely after a thawing in trade relations between the U.S. and China.
-- There is now a 57% chance the Federal Reserve holds rates steady through its next two meetings, CME FedWatch data shows.
-- That's up from 40% as of Friday, according to the data, which is based on futures tied to the fed-funds rate.
May 4, 2025
SGH Insight
As the Federal Reserve heads into its May FOMC meeting this week the economic outlook remains mired in uncertainty. The Trump Administration’s lack of clarity on both the timing and magnitude of trade policy changes is weighing on firms’ and households’ sentiment, raising their inflation expectations, and delaying their longer-term decisions. Still, the hard data, while backward looking, remains solid, leading to the tension or current disconnect with the deteriorating soft data. The Fed will not change policy rates at this week’s meeting as it faces the challenge of managing a shock that is pulling on both sides of its mandate.
We frequently get the question “will Powell kill June?” It’s rare that Powell explicitly prejudges a meeting outcome; he almost always leaves a caveat about the data. He could repeat Waller’s guidance about waiting for July tariff news, which by default would imply no June. Or Powell could say that participants did not discuss the timing of any potential rate changes, which would also suggest that the Fed did not intend to cut rates in June. Ultimately, regardless of the exact language, Powell will dissuade market participants from expecting a June rate cut.
Market Validation
We frequently get the question “will Powell kill June?” It’s rare that Powell explicitly prejudges a meeting outcome; he almost always leaves a caveat about the data. He could repeat Waller’s guidance about waiting for July tariff news, which by default would imply no June. Or Powell could say that participants did not discuss the timing of any potential rate changes, which would also suggest that the Fed did not intend to cut rates in June. Ultimately, regardless of the exact language, Powell will dissuade market participants from expecting a June rate cut.
Bloomberg 5/7/25
Federal Reserve officials held interest rates steady for a third-straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment.
“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement Wednesday at the conclusion of a two-day meeting in Washington. “The committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”
Bloomberg 5/7/25
The US dollar rose more than 0.4% to a session high and the Japanese yen fell close to 1% after Federal Reserve Chair Jerome Powell downplayed prospects of monetary easing.
BBDXY advanced as much as 0.43% and USD/JPY rose as much as 0.93% to a high of 143.78; both have since trimmed gains
Powell said in Q&A session that there’s no need to adjust rates “in a hurry” and the central bank doesn’t see progress on its price goals this year “if tariffs stay”
Federal Reserve officials held interest rates steady for a third-straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment.
“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement Wednesday at the conclusion of a two-day meeting in Washington. “The committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”
Bloomberg 5/7/25
The US dollar rose more than 0.4% to a session high and the Japanese yen fell close to 1% after Federal Reserve Chair Jerome Powell downplayed prospects of monetary easing.
BBDXY advanced as much as 0.43% and USD/JPY rose as much as 0.93% to a high of 143.78; both have since trimmed gains
Powell said in Q&A session that there’s no need to adjust rates “in a hurry” and the central bank doesn’t see progress on its price goals this year “if tariffs stay”
May 1, 2025
SGH Insight
The details of tomorrow’s employment report could in the Fed’s eye sharply reduce chances for a June rate cut. As we have laid out in previous reports, Fed speakers have coalesced around a “hold steady” policy stance as rising risks to the inflation and employment sides of the mandate have an ambiguous impact on the appropriate path for policy rates. Fed speakers have implied they don’t expect to cut interest rates in the first half of this year, and Federal Reserve Governor Chris Waller offered unusually direct guidance about June by saying the Fed expects it needs to see the final tariff schedule before cutting rates and that will not arrive until July. That’s like saying “not June.”
Market Validation
Bloomberg 5/2/25
Treasuries fell after stronger-than-expected US employment data that showed tariff uncertainty has yet to materially hit the nation’s jobs market, prompting traders to trim bets on imminent interest-rate cuts.
The yield on two-year notes rose as much as seven basis points to 3.77% after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders cut bets on the Federal Reserve’s rate reductions, pricing in around 85 basis points of total easing this year, compared to around 90 basis points before the report.
Treasuries fell after stronger-than-expected US employment data that showed tariff uncertainty has yet to materially hit the nation’s jobs market, prompting traders to trim bets on imminent interest-rate cuts.
The yield on two-year notes rose as much as seven basis points to 3.77% after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders cut bets on the Federal Reserve’s rate reductions, pricing in around 85 basis points of total easing this year, compared to around 90 basis points before the report.
April 30, 2025
SGH Insight
Meanwhile, the BOJ, which began its two-day policy meeting on Tuesday, is all but certain to hold rates at 0.50% and downgrade its growth expectations due to tariff impacts on the economy. Governor Kazuo Ueda will deliver a press conference on May 1, when he is expected to emphasize that tariffs have clouded the outlook for future hikes.
While we continue to view the BOJ as likely to move rates higher this year, the Bank clearly has been sidelined for now.
Market Validation
While we continue to view the BOJ as likely to move rates higher this year, the Bank clearly has been sidelined for now.
Bloomberg 5/1/25
The Bank of Japan left its benchmark rate
unchanged while pushing back the timing for when it expects to
reach its inflation target amid intensified uncertainties due to
US tariff measures.
Governor Kazuo Ueda’s board maintained the central bank’s
policy rate at 0.5% at the end of the two-day gathering,
according to a statement, as expected by all 54 economists
surveyed by Bloomberg.
The BOJ said it expects inflation to be consistent with its
2% goal around the second half of its outlook period, which was
extended by a year to include fiscal 2027. The bank halved its
economic growth projection to 0.5% for this fiscal year in a
sign of heightened caution following the US levies.
The Bank of Japan left its benchmark rate
unchanged while pushing back the timing for when it expects to
reach its inflation target amid intensified uncertainties due to
US tariff measures.
Governor Kazuo Ueda’s board maintained the central bank’s
policy rate at 0.5% at the end of the two-day gathering,
according to a statement, as expected by all 54 economists
surveyed by Bloomberg.
The BOJ said it expects inflation to be consistent with its
2% goal around the second half of its outlook period, which was
extended by a year to include fiscal 2027. The bank halved its
economic growth projection to 0.5% for this fiscal year in a
sign of heightened caution following the US levies.
News and Events
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