USD/JPY Declines on Soft US Jobs Data, Eyes on Trump
Trump's policies may limit the Federal Reserve's capacity to lower interest rates in 2025.
After the Federal Reserve cut interest rates by 100 basis points, the market generally believes that future policy easing will depend on further evidence of economic weakness in the USA and a reduction in inflationary pressures. Trump's low tax and loose regulatory policies are expected to promote economic growth, while immigration controls and trade tariffs may pose a risk of price increases, meaning the market may have to wait some time to see the next rate cut from the Federal Reserve. Trump's policies will keep the Federal Reserve in a mildly hawkish stance. At the December FOMC meeting, the Federal Reserve cut rates by 25 basis points as expected. However, at the subsequent press conference, the Federal Reserve stated.
Japanese media reports: The Bank of Japan determines that Trump's inauguration has not yet caused a shock and will resume interest rate hikes on Friday.
① Reports on Thursday evening indicated that most of the Bank of Japan's policy board members would approve the interest rate hike proposal on Friday, with representatives from the government also accepting this decision; ② According to informed sources, the trend of rising wages in Japan and the market conditions following the inauguration of President Trump in the USA have led officials to determine that it is now possible to continue advancing the rate hike; ③ The anticipated 25 basis points increase would be the largest rate hike by the Bank of Japan since 2007.
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