Remarks of Officials

At the Monetary Policy Meeting held on September 20, the Bank of Japan decided, by a unanimous vote, to keep the overnight call rate unchanged at around 0.25 percent, which is in line with market expectations. The Bank of Japan indicates that inflation expectations have risen moderately, which is likely to be at a level that is generally consistent with the price stability target in the second half of FY2026.

On Thursday, the Bank of England (BOE) left its benchmark interest rate unchanged at 5.00%, in line with market expectations. The Monetary Policy Committee voted 8-1 in favor of the decision, a result that contrasts with Wednesday's 0.5 percentage point rate cut in the United States.

The minutes of the Bank of Canada's policy meeting released on Wednesday reflected that members agreed that with broad inflationary pressures continuing to ease, it was appropriate to reduce the policy rate further. With inflation approaching the target, they needed to increasingly guard against the downside risks to inflation stemming from weakness in economic activity.

The Federal Reserve announced on September 18 that it would lower the target range for the federal funds rate by 50 basis points to a level between 4-3/4 to 5 percent, which is the first interest rate cut since March 2020, and marks a shift in monetary policy from a tightening cycle to an easing cycle.

The European Central Bank (ECB) announced on Thursday a 25 basis point cut in the deposit facility rate to 3.5%. It cut the interest rates on the main refinancing operations and the marginal lending facility by 60 basis points to 3.65% and 3.9% respectively. The ECB said lower inflation and economic growth allowed it to ease its tightening slightly. However, there was no clear hint of further rate cuts in October.

European Central Bank (ECB) President Christine Lagarde said at a news conference on Thursday that inflation is expected to pick up in the second half of the year, and wages are still rising at a high rate. A further modest easing of monetary policy tightening would be appropriate. Decisions will be made on a meeting-by-meeting basis in the future, with no commitment to any particular rate path.

Fed Governor Waller said on Friday that the Fed should lower the target range for the federal funds rate at its next meeting in light of the considerable and ongoing progress in inflation, and he is open-minded about the size and pace of cuts.

On September 5, local time, Reserve Bank of Australia (RBA) Governor Bullock said she sought to reduce inflation in a reasonable timeframe and support employment. The policy will remain restrictive until inflation returns to the target range in a sustainable manner. There will be no rate cuts in the near term, and inflation needs to slow in real numbers before taking action.

Bank of Canada (BOC) Governor Tiff Macklem held a press conference on September 4 following the release of the BOC's August interest rate decision. He said that as inflation gets closer to its target, there is a growing need to guard against the risk that the economy is too weak and inflation falls too much. If inflation slows as expected, then further rate cuts would be justified.