Welcome to Extreme Investor Network, your go-to source for all things finance and investment related. Today, we are diving into the latest insights from Fitch regarding the U.S. Federal Reserve’s easing cycle and the monetary policies of key players in the Asian market.
The U.S. Federal Reserve’s Easing Cycle
According to Fitch, the upcoming rate cuts by the U.S. Federal Reserve are expected to be “mild” compared to historical standards. The ratings agency forecasts a 25-basis-point cut at both the September and December meetings, followed by a series of cuts totaling 250 basis points by 2026. This gradual approach is driven by the need to address inflation concerns, as CPI inflation is currently above the Fed’s 2% target.
Recent data from the Labor Department shows a decline in U.S. inflation in August, with the consumer price index rising by 2.5% year-on-year. While core CPI rose by 0.3% for the month, Fitch remains cautious about the challenges faced by the Fed in managing inflation.
Dovish China, Hawkish Japan
In the Asian market, Fitch anticipates further rate cuts in China as deflationary pressures take hold. The recent rate cut by the People’s Bank of China reflects a broader trend of easing monetary policy in the region. Meanwhile, the Bank of Japan has taken a more hawkish stance, with core inflation consistently above the target and positive signs of a “virtuous wage-price cycle.”
Looking ahead, Fitch expects the BOJ’s benchmark policy rate to reach 1% by the end of 2026, signaling a more aggressive approach compared to consensus expectations. As these developments unfold, the global repercussions of these diverging monetary policies will continue to be closely monitored.
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