Most Asian stocks slid on Thursday as investors weighed the economic impact of Trump’s second presidency , particularly his promise of increased tariffs . In response, the dollar climbed , adding over 1% on Wednesday. Major indices fell in China, Australia, and South Korea , while Japan showed mixed results. This followed a record surge in the S&P 500, which climbed 2.5% on Wednesday, marking its best post-election day ever, with the Nasdaq 100 up by 2.7% . Many expect the Federal Reserve (Fed) to cut interest rates today, a move closely watched by global markets. US stock gains largely reflect expectations of Trump’s pro-business agenda , centered on tax cuts and lighter regulations , which could potentially bolster corporate profits. However, Treasury yields jumped 16 basis points as Trump’s fiscal and tariff plans are predicted to fuel inflation, complicating the Fed’s efforts to reduce borrowing costs. In China, the CSI 300 Index fell by 1% , marking its second consecutive d
Bank of Japan (BOJ) Governor Kazuo Ueda said on Wednesday that it is "still taking time" to sustainably reach the central bank's 2% inflation target, signaling a cautious approach to raising Japan’s near-zero interest rates.
Speaking at a panel during the International Monetary Fund (IMF) meeting, Ueda acknowledged the potential risks of moving too slowly in adjusting rates, which could lead to a yen depreciation and higher import costs. However, he stressed that moving too fast could also result in speculative activity that could destabilize markets.
"When there's huge uncertainty, you usually want to proceed cautiously and gradually," Ueda said. But he added, "If you proceed very, very gradually and create expectations that rates will stay low for too long, you could see a build-up of speculative positions."
The BOJ has already begun to move away from negative rates, raising short-term rates to 0.25% in July, citing Japan's progress toward reaching the inflation goal. However, Ueda emphasized the need to closely monitor global uncertainties, such as the US economic outlook, before making further adjustments.
Despite underlying inflation showing some upward momentum, Ueda explained that it is still "taking time" to achieve 2% inflation sustainably, citing global energy and food price increases and rising wages as contributing factors. The central bank continues to maintain an easy policy to raise inflation expectations and drive Japan to a stable 2% inflation equilibrium.
The BOJ is expected to keep interest rates steady at its upcoming policy meeting next week, with most economists predicting a further rate hike by March of next year. Ueda remained cautious about future rate hikes, stating it is difficult to determine the right size and timing, saying, "We can't telegraph all our future movements."
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