Central Bank

The Bank of Japan is expected to raise interest rates on Friday barring any market shocks when U.S. President-elect Donald Trump takes office, a move that would lift short-term borrowing costs to levels unseen since the 2008 global financial crisis.

The Bank of England will comfortably pass a 25 basis point cut next month and could get in a couple more before year-end.

Prospects of sustained wage gains in Japan and the boost to import costs from a weak yen have heightened attention within the central bank to rising inflationary pressures that may lead to an upgrade in its price forecast this month, sources said.

The US banking system’s reserves, a key factor in the Federal Reserve’s decision to keep shrinking its balance sheet, tumbled below $3 trillion to the lowest since October 2020.

The onshore yuan weakened past a level that China had been defending throughout December, opening up room for the managed currency to drop further amid a sluggish economy.

The Trump 2.0 version should be supportive of strong USD in 2025.

We continue to agree with market pricing following the ECB’s latest rate cut, but see additional downside risks to growth post-U.S. election.

At the December Monetary Policy Committee meeting, the CBT cut its policy rate by 250bp to 47.5%, which was more than the consensus forecast of a 150bp reduction, but in line with our expectation and narrowed the interest rate corridor from 600bp to 300bp.

2-year and 10-year yields stand at 4.33% and 4.58%, respectively, at the time of writing.