The Federal Reserve has revealed that progress in bringing inflation down to its 2% target has been slow. This indicates that any interest rate cuts are unlikely to occur until at least the end of the year. Previously, investors had anticipated around six quarter-of-a-percentage-point reductions in 2024, but have since adjusted their expectations.
In response to the announcement, the yen experienced a substantial rebound, sparking speculation that authorities may have intervened to bolster the currency for the first time since 2022. The yen had fallen to a 34-year low of 160 to the dollar following the Bank of Japan’s decision to maintain its benchmark interest rate between zero and 0.1%. Despite raising the rate from minus 0.1% in March, there was no clear indication of when it might raise rates again, and no plan was presented to significantly reduce bond purchasing activities.