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6h ago

Fed Cuts Rates Again as BOJ Holds, Markets Weigh Diverging Paths

Powell cast doubt on a December cut, citing a shutdown-driven data gap.

Japanese national flag hoisted atop of the Bank of Japan headquarters building is seen between traffic signals in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
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A man stands inside Taiwan's central bank in Taipei, Taiwan May 29, 2025. REUTERS/Ann Wang
The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger

Overview

  • The Federal Reserve lowered the federal funds rate by 25 basis points to 3.75%–4.00%, its second cut of 2025.
  • The decision passed 10–2, with Stephen Miran favoring a larger half-point cut and Jeffrey Schmid preferring no change, as Powell said a December move is not a foregone conclusion.
  • The Fed said it will stop shrinking its securities holdings on December 1 and is leaning on private indicators with key government data delayed by the shutdown.
  • The Bank of Japan kept its short-term rate at 0.5% by a 7–2 vote, with Naoki Tamura and Hajime Takata backing a hike to 0.75% as the yen softened and officials flagged tariff and political uncertainties after Sanae Takaichi became prime minister.
  • Markets showed a mixed response with U.S. indexes choppy, Asian trading uneven, a slightly stronger open signaled for India, and the ECB widely expected to hold rates as eurozone inflation hovers near target.