BOJ Debated Likelihood Of Near-term Rate Hike, October Meeting Summary Shows

Summary:

Bank of Japan policymakers saw a growing case to raise interest rates in the near term, with some calling for the need to ensure companies' wage-hike momentum will be sustained, a summary of opinions at the October meeting showed on Monday.

Of the 13 opinions on monetary policy from the nine-member board, eight called for the need to raise interest rates soon or laid out specific conditions to hike borrowing costs in the near-term horizon, the summary showed.

"While the current situation may not require immediate action, the Bank should not miss the timing to raise the policy interest rate," one member was quoted as saying in the summary.

The BOJ is likely to raise rates if there is "no negative news" regarding the global economy or markets, and if it can confirm that firms' active wage-setting behaviour will be maintained, another opinion showed.

At the two-day meeting through October 30, the BOJ kept interest rates steady at 0.5%. Two board members dissented to the decision and instead proposed hiking rates to 0.75%.

In a news briefing after the meeting, BOJ Governor Kazuo Ueda said he wanted to await "a bit more data" to confirm whether companies will keep raising wages despite pressure from higher U.S. tariffs.

Source: Investing

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Chandan Gupta

The record-breaking US government shutdown is nearing an end after a group of moderate Senate Democrats agreed to support a deal to reopen the government and fund some departments and agencies for the next year, people familiar with the talks said.

Under the agreement, Congress would pass full-year funding for the departments of Agriculture, Veterans Affairs and Congress itself, while funding other agencies through Jan. 30. The bill would provide pay for furloughed government workers, resume withheld federal payments to states and localities and recall agency employees who were laid off during the shutdown.

The chamber is set to hold a procedural test vote on Sunday. If that vote succeeds, the Senate will need the consent of all members to end the shutdown quickly. Any one senator can force days of delay and votes. The House would then need to pass the bill for the government to reopen and Speaker Mike Johnson has said he will give lawmakers two days notice to return.

"It looks like we're getting closer to the shutdown ending," President Donald Trump told reporters Sunday evening as he returned to the White House.

House passage is not guaranteed. Democratic leaders have spoken out against any deal that doesn't include extending expiring Obamacare subsidies, which this bill does not do. Conservative Republican members want a bill that would fund the entire government until next Sept. 30.

The face-saving accord also falls far short of the goals of House and Senate Democratic leaders, who had demanded an extension of expiring Obamacare premium subsidies and a repeal of Medicaid cuts passed by Republicans earlier this year.

"We will fight the GOP bill in the House of Representatives," House Democratic leader Hakeem Jeffries said in a statement Sunday night.

Instead, the group of Democratic senators accepted the promise of a Senate vote this year on an extension of the Affordable Care Act subsidies — a pledge that was extended weeks ago by Senate Majority Leader John Thune.

Earlier: US to Send Some SNAP Funds Despite Trump Post, White House Says

The approaching resolution of the 40-day shutdown mirrors that of past showdowns where the party attempting to leverage a government closure for policy victories ends up without a victory. Trump failed to secure border wall funding through the 2018-2019 shutdown and Republicans failed to repeal Obamacare during the 2013 closure.

Democrats this year voted 14 times to block a no-strings stopgap measure passed by the House on Sept. 19 that would have kept departments and agencies open through Nov. 21. On Wednesday, the shutdown became the longest in US history, exceeding the 35-day closure in 2018 and 2019 under the first Trump administration.

On Friday, Senate Democratic leader Chuck Schumer said Democrats would allow the government to reopen in exchange for a one-year extension of the expiring Obamacare tax credits.

That offer was swiftly rejected by Republicans, many of whom are demanding a wholesale replacement of Obamacare with a yet-to-be unveiled GOP alternative.

Republicans decided to stonewall Democrats on their demands for $1.5 trillion in new spending by keeping the House out of session since Sept. 19. The White House escalated the pressure by firing government employees en masse, threatening not to pay more than 600,000 furloughed federal workers, and working to defy court orders to pay food stamp benefits.

As the busy Thanksgiving travel season neared, Transportation Secretary Sean Duffy ordered airlines to cancel flights, causing major headaches for travelers. On Sunday, he said it would only get worse in the holiday season.

The tactics largely worked in getting enough Senate Democrats to fold under pressure. Republicans, despite controlling both houses of Congress, needed eight Democrats to go along with a stopgap spending bill to shut off debate in the Senate.

Talks among a group of bipartisan senators accelerated after Democratic sweeps in the off-year elections in New York City, New Jersey, Virginia, California and elsewhere. Republicans said that Democrats appeared concerned that backing off their shutdown demands before voters went to the polls would depress turnout.

It's unclear whether Congress will come to a deal on extending the Obamacare subsidies before they expire at the end of December. House Republican leaders say they are opposed to the extension and instead have floated a series of conservative priorities that include expanding short-term health insurance plans to compete with the Obamacare exchange plans and imposing abortion-related restrictions.

Senate Republicans have said any extension would have to include major changes, such as income caps on who can receive subsidies and a requirement that recipients pay at least some premium. Some, however, are demanding a wholesale rewrite of the Affordable Care Act before agreeing to anything.

The shutdown consequences are costing the US economy about $15 billion a week. And the Congressional Budget Office estimates that the shutdown will reduce annualized quarterly growth rate of real GDP by 1.5 percentage points by mid-November. Consumer sentiment hit a three-year low on Friday amid heightened anxiety about the shutdown, prices and the job market.

It has led to a suspension of most government economic data, causing the Federal Reserve to fly blind as it navigates stubbornly high inflation and rising unemployment.

Source: Bloomberg Europe

Risk Warnings and Disclaimers

Add to Favorites

James Whitman

Political

The U.S. Senate on Sunday moved toward a vote on reopening the federal government amid optimism that an end to the historic shutdown, now in its 40th day, is within reach.

Senators plan to vote on advancing a House-passed stopgap funding bill as early as Sunday evening, with the understanding that it would be amended to combine a short-term funding measure with a package of three full-year appropriations bills, Senate Majority Leader John Thune said.

The amended package would still have to be passed by the House of Representatives and sent to President Donald Trump for his signature, a process that could take several days.

Senate Democrats so far have resisted efforts to pass a funding measure, aiming to pressure Republicans to agree to healthcare fixes that would include extending expiring subsidies under the Affordable Care Act. Under the deal being discussed, the Senate would agree to hold a separate vote later on the subsidies.

U.S. Senator Richard Blumenthal, a Democrat, told reporters that he would vote against the funding measure but suggested there could be enough Democratic support to pass it.

"I am unwilling to accept a vague promise of a vote at some indeterminate time, on some undefined measure that extends the healthcare tax credits," Blumenthal said.

Sunday marked the 40th day of the shutdown, which has sidelined federal workers and affected food aid, parks and travel, while air traffic control staffing shortages threaten to derail travel during the busy Thanksgiving holiday season late this month.

Senator Thom Tillis, a Republican from North Carolina, said the mounting effects of the shutdown have pushed the chamber toward an agreement. He said the final piece, a new resolution that would fund government operations into late January, would also reverse at least some of the Trump administration's mass layoffs of federal workers.

"Temperatures cool, the atmospheric pressure increases outside and all of a sudden it looks like things will come together," Tillis told reporters.

Should the government remain closed for much longer, economic growth could turn negative in the fourth quarter, especially if air travel does not return to normal levels by Thanksgiving, White House economic adviser Kevin Hassett warned on the CBS "Face the Nation" show. Thanksgiving falls on November 27 this year.

TRUMP TAKES AIM AT HEALTHCARE SUBSIDIES

The wrangling on Capitol Hill came as Trump on Sunday again pushed to replace subsidies for the Affordable Care Act's health insurance marketplaces with direct payments to individuals.

The subsidies, which helped double ACA enrollment to 24 million since they were put in place in 2021, are at the heart of the shutdown. Republicans have maintained they are open to addressing the issue only after government funding is restored.

Trump took to his Truth Social platform on Sunday to blast the subsidies as a "windfall for Health Insurance Companies, and a DISASTER for the American people," while demanding the funds be sent directly to individuals to buy coverage on their own. "I stand ready to work with both Parties to solve this problem once the Government is open," Trump wrote.

U.S. Treasury Secretary Scott Bessent and Senator Lindsey Graham, a staunch Trump ally, said in separate TV interviews that Trump's healthcare idea would not be introduced before lawmakers pass a federal funding measure.

"We're not proposing it to the Senate right now," Bessent said in an interview with ABC's "This Week" program. "We are not going to negotiate with the Democrats until they reopen the government."

Americans shopping for 2026 Obamacare health insurance plans are facing a more than doubling of monthly premiums on average, health experts estimate, with the pandemic-era subsidies due to expire at the end of the year.

Republicans rejected a proposal on Friday by Senate Minority Leader Chuck Schumer, a Democrat from New York, to vote to reopen the government in exchange for a one-year extension of tax credits that lower costs for plans under the Affordable Care Act, often referred to as Obamacare.

Democratic Senator Adam Schiff said on Sunday he believed Trump's healthcare proposal was aimed at gutting the ACA and allowing insurance companies to deny coverage to people with pre-existing conditions.

"So the same insurance companies he's railing against in those tweets, he is saying: 'I'm going to give you more power to cancel people's policies and not cover them if they have a pre-existing condition,'" Schiff said on ABC's "This Week" program.

Source: Reuters

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Forex

A Long-Considered Move Gains New Momentum

Indonesia's Ministry of Finance has revived plans to redenominate the rupiah, signaling a serious step toward overhauling its monetary system. According to official documents referenced by Reuters and regional outlets such as Channel News Asia and The Business Times, the proposed redenomination is part of a broader strategic framework outlined in Regulation No. 70/2025 and the 2025–2029 Strategic Plan.

The central idea is to simplify nominal values potentially by removing three zeros while maintaining real economic value. For example, 1,000 rupiah may become 1 rupiah under the new system, without changing the underlying price of goods or services. This is a purely technical adjustment and should not be confused with devaluation or a change in the monetary regime.

Objectives: Boost Efficiency and Trust in the Currency

The rationale behind the proposed redenomination is multifaceted. First, it aims to streamline accounting, pricing systems, digital payment platforms, and financial software infrastructure. Second, it is intended to reinforce the public’s trust in the rupiah by aligning its nominal value more closely with regional currencies.

According to CNA and Reuters, policymakers argue that overly large nominal figures in everyday transactions lead to inefficiencies, confusion, and operational burdens. The Ministry of Finance and Bank Indonesia assert that redenomination can enhance the currency’s credibility especially at a time when Indonesia is asserting itself more visibly in global trade and investment flows.

Not a Response to Inflation, but a Structural Reform

Crucially, the plan is not a reaction to hyperinflation or a collapsing currency. In fact, the macroeconomic backdrop in 2025 is relatively stable. The government projects a 2.53% budget deficit for the year, plans to deliver a fiscal stimulus package worth nearly 16.23 trillion rupiah in Q4 to support welfare and growth, and is targeting 5.4% GDP growth in 2026 with inflation around 2.5%.

This stability creates a favorable context for redenomination, which if done amid economic turbulence could risk misinterpretation as a sign of crisis. Past discussions of redenomination since 2013 were shelved in part due to such concerns, but the current climate appears more conducive to gradual, technically grounded implementation.

Implementation Timeline and Technical Considerations

The current plan envisions completion of the legal framework by 2027, followed by a phased rollout. According to NST and The Star, a multi-year transition period is expected, involving dual circulation of old and new currency, updates to ATM and POS systems, software recalibration, and widespread public communication campaigns.

The government will also need to ensure coordinated action between the Ministry of Finance, Bank Indonesia, commercial banks, and the business community. Experts caution that while redenomination can improve transactional clarity and symbolic confidence, it does not generate growth or reduce inflation on its own.

Lessons and Risks: Execution Will Define Outcome

Business Times and other observers highlight that the ultimate success of Indonesia’s redenomination effort will depend on strong policy execution, public transparency, and institutional coordination. Public understanding is key: if citizens misinterpret the move as inflationary or destabilizing, it could backfire despite the technical correctness of the process.

As Bert Hofman from NUS notes in the broader context of monetary reform, redenomination is often misunderstood. The reform must be communicated clearly as a modernization step not a monetary reset or austerity measure.

A Strategic, Not Symbolic Reform

Indonesia’s planned redenomination of the rupiah marks a strategic effort to modernize its currency structure, enhance the efficiency of its financial system, and project greater monetary confidence. If implemented with precision, clarity, and public engagement, the reform could simplify everyday transactions and elevate the rupiah’s domestic and international stature without altering citizens’ real purchasing power.

However, its success hinges not on the technical mechanism but on political will, institutional capability, and public trust. As Indonesia prepares for this transition, the eyes of neighboring economies particularly those managing high-denomination currencies will be watching closely.

Risk Warnings and Disclaimers

Add to Favorites

James Whitman

Economic

US investors are increasingly buying Japanese stocks focused on tech and artificial intelligence, lured by the country's outsized returns compared with US stocks, according to Goldman Sachs Group Inc.

"The increase in US flows is now moving at the fastest pace we've seen since Abenomics," said Bruce Kirk, the bank's chief Japan equity strategist. US investor active participation in Japanese equities is at the highest level since October 2022, Kirk said, adding that he gets frequent requests for meetings.

The inflow of US funds reflects the strong performance of Japanese equities in dollar terms this year. They have been helped by a 2.5% gain in the yen and renewed optimism driven by the pro-stimulus policies of prime minister Sanae Takaichi. The benchmark Nikkei 225 index has climbed about 30% in dollar terms this year, far outpacing the S&P 500 index's 14% gain.

Rising participation from US funds could mark a turning point for Japan's equity market, signaling a potential shift in drivers to growth-oriented shares from value stocks. Driven by pro-investor initiatives from the Tokyo Stock Exchange and the government, value stocks have outperformed growth stocks for four consecutive years since 2021.

"It's very significant that you've got more US participation coming and they tend to gravitate toward tech and AI-related themes," Kirk said in an interview on Nov. 6.

Kirk sees further upside in foreign fund inflows as global investors' net positions in Japanese equities remain light compared to the peak of Abenomics, leaving room for further buying. Global investors' continued diversification needs will likely sustain that trend, he said.

Foreign investors bought a net 384 billion yen ($2.5 billion) of Japanese equities in cash and futures in the last two weeks of October, according to data released by Japan Exchange Group.

Even so, given that the Nikkei entered overbought territory in late October, Kirk said he would not be surprised to see the market consolidate.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Forex

Offshore Yuan Lending Grows Fourfold Amid Strategic Currency Push

Over the past five years, offshore yuan lending, deposits, and bond investments by Chinese banks have quadrupled to over 3.4 trillion yuan ($480 billion), marking a significant shift in China’s financial diplomacy. The State Administration of Foreign Exchange (SAFE) reports that yuan-based fixed income assets abroad have surged to $484 billion as of mid-2025 up from just $110 billion in 2020.

This expansion reflects a clear and deliberate policy goal: to strengthen the yuan’s role in global finance and reduce exposure to US dollar-centric systems. The People's Bank of China and policymakers in Beijing are pushing the yuan as a trade finance currency amid rising geopolitical frictions and sanctions, such as recent EU measures targeting Chinese banks allegedly aiding Russia’s military supply chain.

Yuan's Rise in Trade Finance: From Niche to Global Player

According to SWIFT, the yuan's share in global trade finance has soared fourfold in just three years, reaching 7.6% in September second only to the US dollar. This shift is largely driven by Beijing’s effort to provide alternatives to dollar-based transactions, especially for developing economies vulnerable to Western financial pressures.

BIS data also confirms this structural shift. Between 2021 and March 2025, RMB-denominated loans to developing countries grew by $373 billion, displacing dollar and euro-based credit. Countries like Kenya, Ethiopia, and Angola have begun refinancing older dollar debts in yuan, attracted by China's lower interest rates. Kazakhstan’s Development Bank, for instance, issued 2 billion yuan in bonds at a modest 3.3% yield, a move mirrored by Slovenia and Indonesia.

This trend demonstrates a causal shift in sovereign financing preferences: nations are responding to both lower funding costs and geopolitical alignment incentives, favoring yuan-linked instruments over traditional dollar channels.

CIPS and De-Dollarization: Building the Infrastructure for Financial Independence

Central to this currency strategy is CIPS the Cross-Border Interbank Payment System which serves as China’s alternative to SWIFT. While the yuan’s global payment share on SWIFT has dipped, CIPS volume has exploded, now handling over 40 trillion yuan per quarter. This divergence suggests a migration of payment flows from Western infrastructures to Beijing-controlled platforms.

Bert Hoffman from the National University of Singapore explains that Chinese officials view a dollar-centric payment system as inherently unstable, preferring a multi-currency settlement model anchored in Chinese infrastructure. This strategy is aimed at reducing systemic vulnerability and shielding China from future financial coercion.

The growth of CIPS, combined with an expanding network of currency swap lines and clearing banks, reflects Beijing’s determination to build a parallel financial ecosystem one that is more autonomous and politically insulated.

Constraints on Yuan’s Global Reserve Role Remain

Despite these advancements, the yuan’s status as a global reserve currency remains limited. IMF data shows the yuan accounts for only 2.1% of official global reserves as of early 2025. This stagnation is largely due to China’s persistent capital controls, which restrict free conversion and dampen investor confidence.

There is a clear tension between China’s desire for greater international use of the yuan and its reluctance to liberalize financial flows. As long as the People’s Bank of China maintains tight control over capital movement, the yuan will struggle to rival the dollar or euro as a store of value even if its use in trade and credit expands.

Yuan Internationalization Gains Momentum But Faces Structural Limits

China’s global yuan push marks a bold evolution in its financial policy, reflecting both ambition and strategic necessity. Offshore lending, rising trade settlement in yuan, and the growth of CIPS illustrate meaningful progress in reshaping the international currency landscape. Yet structural obstacles especially capital controls and limited transparency continue to constrain the yuan’s rise as a true reserve currency.

The surge in yuan-based finance reveals a long-term trajectory toward de-dollarization and financial bifurcation. As geopolitical fragmentation deepens, the yuan is positioned to play a larger role in emerging markets, but whether it can achieve parity with the dollar remains uncertain. Much will depend on China’s willingness to align financial openness with its global ambitions.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Unexpected Decline Signals Mounting External Pressures

China’s export sector, long regarded as a cornerstone of its economic resilience, showed signs of stress in October 2025. According to customs data released on November 7, exports contracted by 1.1% year-over-year, missing economists’ forecasts of a 3% gain. This marks the first year-on-year decline since March 2024 and comes as a surprise given earlier expectations of a rebound.

The downturn in exports is primarily attributed to a sharp 25.17% drop in shipments to the United States, a consequence of heightened tariff threats from President Donald Trump in response to Beijing’s restrictions on rare earth exports. Although exports to the EU and ASEAN countries grew slightly (0.9% and 8.9% respectively), these gains were insufficient to offset the drag from US-bound shipments.

The data suggest a causal link between protectionist measures and weakened export momentum, with analysts estimating that tariffs have reduced China’s annual export growth by approximately 2 percentage points translating into a 0.3% GDP impact.

Trade Truce Eases Immediate Risk But Uncertainty Persists

Tensions reached a boiling point in early October when Trump threatened to impose a 100% tariff on Chinese imports. However, markets breathed a sigh of relief after a one-year trade truce was negotiated during a bilateral summit in South Korea between Trump and Chinese President Xi Jinping. The agreement included mutual tariff reductions, eased export controls on strategic minerals and technologies, and China’s renewed pledge to purchase more US soybeans and help combat fentanyl trafficking.

As a result, the average US tariff on Chinese exports has dropped to 31%, according to estimates from Macquarie Group. Economists like Woei Chen Ho of UOB note that the short-term export outlook for China has stabilized due to the truce, although long-term supply chain decoupling remains inevitable.

The pattern here is clear: while temporary political accords can provide short-term relief, structural shifts in global trade flows continue to undermine China’s traditional export dominance.

Industrial Weakness and Domestic Headwinds Weigh on Imports

Although China posted a 1% increase in imports, the figure fell short of the 3.2% consensus estimate. Persistently weak domestic consumption dragged down by a stagnant property sector and lackluster job growth has constrained demand for foreign goods.

Additionally, manufacturing activity has now declined for seven consecutive months. This ongoing contraction reflects not just cyclical weakness but a broader struggle with overcapacity, falling prices, and intensifying global competition. In response, Beijing has moved to tighten control over industrial output in a bid to mitigate inefficiencies.

Shifting Focus Toward Domestic Demand and Emerging Markets

Despite near-term setbacks, longer-term forecasts suggest some optimism. Oxford Economics has upgraded its 2026 and 2027 GDP growth projections for China to 4.5% and 4.4%, respectively. This revision is supported by China’s increased focus on industrial upgrading under its five-year development plan and a concerted push to diversify export markets toward emerging economies and regional partners.

However, economists caution that if exports fail to recover meaningfully, policymakers may be forced to lean more heavily on domestic consumption. Larry Hu of Macquarie argues that China will eventually need to shift its growth model inward between 2026 and 2030, placing households at the center of its economic engine.

This reflects a potential causal pivot in economic strategy: from export-led growth toward consumption-driven expansion, should external demand continue to falter.

China’s Trade Model Faces Renewed Strains

October’s export decline represents more than just a statistical anomaly it signals a possible turning point for China’s externally driven growth model. While a temporary truce with the US has eased pressure, structural challenges such as shifting global supply chains, decoupling trends, and weak domestic demand remain significant.

Moving forward, China must navigate an increasingly complex economic environment where resilience will depend on balancing industrial efficiency, export market diversification, and robust domestic consumption. Whether policymakers can manage this transition smoothly may define the trajectory of the Chinese economy through the rest of the decade.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites