Analysis

TOKYO (Reuters) -Japan's improving economic conditions and receding U.S. recession worries are likely to bring prospects of a December or January interest rate hike back into view, even as a new government complicates the politics around monetary policy.

Bank of Japan (BoJ) Deputy Governor Ryozo Himino is delivering a speech on Japan's markets at a Bloomberg event on Thursday.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that she "fully" supported the Fed's half of a percentage-point interest-rate cut last month. Daly further stated that one or two more rate cuts this year are likely if the economy evolves as she expects, per Reuters.  

The Reserve Bank of Australia (RBA) published the Minutes of its September monetary policy meeting on Tuesday, highlighting that the board members discussed scenarios for lowering and raising interest rates in the future. 

WASHINGTON/LONDON (Reuters) - With key central banks now aligned in cutting interest rates a real-time experiment is underway in how much the global financial landscape has changed since the pandemic and in particular whether the easing cycle may be short-lived because of higher underlying rates.

FRANKFURT (Reuters) - Policy doves at the European Central Bank are preparing to fight for an interest rate cut next month after a string of weaker-than-expected economic data, a move likely to meet resistance from their more conservative peers, seven sources told Reuters.

Federal Reserve Governor Adriana Kugler said on Wednesday that she “strongly supported” the Fed’s decision to cut the interest rates by a half point last week. Kugler further stated that it will be appropriate to make additional rate cuts if inflation continues to ease as expected, per Bloomberg.

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Thursday, per the BoJ Minutes of the July meeting.Members shared a view over the need for vigilance to the risk of inflation overshoot.

TradingKey - Goldman Sachs forecasts consecutive 25 basis point cuts from November 2024 to June 2025, bringing the federal funds rate to a terminal range of 3.25%–3.5%. Previously, they projected continuous cuts this year and quarterly cuts next year.

The European Central Bank (ECB) governing council member Klaas Knot said on Tuesday that the central bank is likely to continue to cut interest rates at least through the first half of 2025, to a level between 2% and 3%, per Reuters.

Investing.com -- Citi strategists said they expect the Federal Reserve to cut rates by another 50 basis points in November, a decision that will largely depend on incoming data, especially the next monthly jobs report.

Investing.com -- Fed Governor Michelle Bowman said Friday that she voted against the central bank's decision to begin the rate-cutting cycle with jumbo cut to avoid stoking expectations that the Fed has won its battle against inflation.

Federal Reserve (Fed) Bank of Philadelphia Patrick Harker said on Friday that the US central bank has efficiently navigated a challenging economy over the past few years.  

Investing.com-- The People’s Bank of China kept its benchmark loan prime rate unchanged on Friday, but is expected to eventually trim the rate further amid steadily deteriorating economic conditions in the country.

The BoE left policy on hold, as expected at today’s policy decision. The Pound Sterling (GBP) is slightly firmer on the hold, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

The Pound Sterling (GBP) recovers intraday losses in the aftermath of the Federal Reserve’s (Fed) policy announcement, rising above 1.3200 against the US Dollar (USD) in Thursday’s London session.

TradingKey - The Federal Reserve has kicked off a new easing cycle with a 50 basis point rate cut, yet the market rally did not last long. Concerns loom over whether the Fed can replicate the economic soft landing achieved by Alan Greenspan in 1995.

Federal Reserve Chairman Jerome Powell explains the decision to cut the policy rate, federal funds rate, by 50 basis points to the range of 4.75%-5% after the September meeting and responds to questions in the post-meeting press conference.

Investing.com-- Citi analysts said they maintained their outlook for a 50 basis point cut by the Federal Reserve in November, after the central bank cut rates by a similar margin in its first cut since 2020. 

Investing.com-- The Bank of Japan is expected to keep interest rates unchanged at the conclusion of a two-day meeting on Friday, although policymakers could still present a hawkish outlook on expectations of higher inflation.