Chalmers Confident Australian Economy Has ‘Turned the Corner’ in Battle Against Inflation

Economic

Summary:

Forecasts show underlying inflation within Reserve Bank’s 2%-3% target range six months earlier than expected in prediction that will add to calls for another interest rate cut

Treasury has largely declared victory in the protracted battle to tame inflation without tanking the economy, with the budget papers predicting the country will complete its “soft landing” by the middle of this year.

The latest forecasts show the rate of underlying inflation – taking into account the flattening effects of energy rebates – will be “sustainably” within the Reserve Bank’s 2-3% target range by June and six months earlier than expected.

It is a story Jim Chalmers has been keen to sell as he attempts to convince voters not to dwell on what has been a difficult three years.

“The intersection of inflation down, wages up [and] tax cuts … is driving the recovery in household incomes and living standards, and that’s feeding this broader recovery in the economy,” the treasurer told Guardian Australia.' Chalmers Confident Australian Economy Has ‘Turned the Corner’ in Battle Against Inflation_1

Chalmers Confident Australian Economy Has ‘Turned the Corner’ in Battle Against Inflation_1

Headline inflation is now expected to be 2.5% in the year to June – a quarter of a percentage point lower than forecast in December.

In a prediction that will add to calls for another interest rate cut at the central bank’s meeting next week, the budget papers show unemployment is set to remain at about 4.25% over the coming years, rather than rising to 4.5%.

The jobs market again outperformed expectations, helping to swell the government’s coffers, but not by enough to meaningfully improve the bottom line over the coming years.

The budget predicts a string of deficits stretching for a decade, starting at a slightly larger $27.6bn estimated underlying cash deficit for 2025-26. The deficit will then expand to $42.1bn in 2026-27, before averaging about $36bn over the following three financial years.

In contrast to previous budgets where Labor has banked the vast majority of revenue upgrades, the Albanese government’s final budget before the election shows only a $1.6bn improvement in the expected bottom line over the five years to 2028-29.

While Chalmers has been careful not to declare mission accomplished in the battle against inflation, the budget papers reinforce his narrative that the economy has “turned the corner”.

The government can point to inflation more than halving since it took office in 2022, but the high cost of living – including essentials such as groceries, insurance, rents and electricity – remains a defining issue for the budget and the upcoming election.

The 2025-26 budget remained squarely focused at delivering cost-of-living relief to as many Australians as possible.

In addition to a previously announced $8.5bn boost to Medicare and an additional $1.8bn in energy bill relief, Labor delivered a surprise $17.1bn in tax cuts by reducing the lowest rate from 16% to 14% over two years, starting from mid-2026.

Chalmers said the decision to delay the start of tax cuts to next year in part reflected a wariness about the risk of reigniting price pressures.

“On the timing, we are doing what we can afford,” he said. “We want to make sure that the tax cuts we commit to, we are doing that in a responsible way. And we are sequencing it so they come in the middle of next year when the expectation is that inflation will be sustainably within the band.”

After successfully navigating the post-pandemic inflationary surge, Australia now faces the risk of a global trade war that may define the global economy over coming years.

In a worst-case scenario where the US imposes a 25% import tariff on all “‘durable” goods such as steel and aluminium, and then the world retaliates with similar taxes, modelling in the budget papers finds the hit to Australia’s GDP by 2030 would be 0.2% of GDP.

Despite this relatively sanguine estimate, Guardian Australia understands Treasury officials remain deeply concerned about the threat to the global economy from rising protectionism.

“Cost-of-living pressures are still there, although easing in welcome and encouraging ways. But also there’s global economic uncertainty,” Chalmers said.

“So the best way to deal with those two things simultaneously: first of all, rebuild living standards and incomes, as we are doing. And secondly, make our economy more resilient (via measures such as) future made in Australia, competition reform, all of those pieces.”

Source: Theguardian

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Warren Takunda

Economic

In a Truth Social post, Trump said Venezuela has been "very hostile" to the US and countries purchasing oil from it will be forced to pay the tariff on all their trade to the US starting April 2.

The tariffs would most likely add to the taxes facing China, which in 2023 bought 68% of the oil exported by Venezuela, according to a 2024 analysis by the US Energy Information Administration. Spain, India, Russia, Singapore and Vietnam are also among the countries receiving oil from Venezuela, the report shows.

But even the United States — despite its sanctions against Venezuela — buys oil from that country. In January, the United States imported 8.6 million barrels of oil from Venezuela, according to the Census Bureau, out of roughly 202 million barrels imported that month.

And on Monday, the Treasury Department issued an extension for US-based Chevron Corp.'s lease to pump and export Venezuelan oil until May 27. The extension, known as a general license, exempts the country from economic sanctions and allows it to continue to pump oil.

In February, Trump announced an end to the Chevron-Venezuela relationship, in what became a financial lifeline for the South American country.

Venezuelan President Nicolás Maduro responded by accusing the US of violating international trade rules with an "arbitrary, illegal and desperate measure" designed to "undermine the development" of the South American nation.

"For years, the fascist right, repudiated by the Venezuelan people, has promoted economic sanctions with the hope of bringing Venezuela to its knees," the government said in a statement. "They failed because Venezuela is a sovereign country, because its people have resisted with dignity, and because the world no longer submits to any form of economic dictatorship."

The US president is arguing that tariffs will bring back manufacturing jobs, rather than worsen inflationary pressures and hinder growth as economists have warned. His latest anecdotal evidence came Monday as Hyundai announced at the White House that it would build a $5.8bn (€5.4bn) steel plant in Louisiana.

"This investment is a clear demonstration that tariffs very strongly work," said Trump, adding that the new plant by the South Korean automaker would create 1,400 jobs.

Hyundai Motor Group's executive chairman, Euisun Chung, told the president: "We are really proud to stand with you and proud to build the future together."

A bolder move against China?

Trump's latest tariffs threat suggests the administration may be willing to take bolder moves against China in its efforts to rewrite the guidelines of the global economy. The Trump administration has already levied universal 20% tariffs on imports from China as an effort to crackdown on the illicit trade in fentanyl, but another 25% import tax on top of that could further escalate tensions between the world's two largest economies.

Trump said Venezuela will face a "Secondary" tariff because it is the home to the gang Tren de Aragua. The Trump administration is deporting immigrants that it claims are members of that gang who illegally crossed into the United States.

Trump has labelled April 2 as "Liberation Day" based on his still unclear plans to roll out import taxes to match the rates charged by other countries, as well as fully levy 25% tariffs against Mexico and Canada, the two largest US trading partners. The Republican president has also increased his 2018 tariffs on steel and aluminium to 25% for all imports and has committed to additional tariffs on autos, pharmaceutical drugs, lumber, computer chips and copper.

The US stock market had been climbing on Monday as investors expect the tariffs to be more targeted than they earlier feared. Still, the S&P 500 index is down so far this year out of concerns that a trade war could hinder economic growth and increase inflationary pressures.

But Trump has been somewhat closely guarded about his plans for tariffs, saying Monday that even though he wants to charge "reciprocal" rates that "we might be even nicer than that."

Source: Euronews

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Warren Takunda

Stocks

Shares were mixed in Asia on Tuesday, with Chinese markets retreating, following a broad rally on Wall Street fueled by hopes the Trump administration may take a more targeted approach as it tees up a new round of tariffs on imported goods next week.

U.S. futures edged lower and oil prices were little changed.

Tokyo’s Nikkei 225 gained 0.5% to 37,780.54, while the Kospi in South Korea lost 0.6% to 2,615.81.

Hong Kong’s Hang Seng sank 2.1% to 23,402.56 as heavy selling of tech-related shares pulled the benchmark lower.

Cell phone maker Xiaomi’s Hong Kong-traded shares dropped 5.9% and delivery app company Meituan lost 4.2%. E-commerce giant Alibaba was down 3.5%.

The Shanghai Composite index was unchanged at 3,369.98.

Taiwan’s Taiex gained 0.8% and the SET in Thailand lost 0.5%.

Stocks have been riding waves of hope and worry as President Donald Trump has announced and then amended plans on higher tariffs. A new round of tariffs is scheduled for April 2, but Trump has been somewhat closely guarded about his plans, saying Monday that even though he wants to charge “reciprocal” rates — import taxes to match the rates charged by other countries -- that “we might be even nicer than that.”

Other comments have provided less reassurance and in recent days, Chinese markets that had been riding high have pulled back. In a Truth Social post, Trump said Venezuela has been “very hostile” to the U.S. and countries purchasing its oil will be forced to pay a 25% tariff on all exports to the U.S. starting April 2.

That would likely more than double the already high tariffs facing China, which in 2023 bought 68% of the oil exported by Venezuela, according to a 2024 analysis by the U.S. Energy Information Administration. The U.S. also imports oil from Venezuela.

On Monday, the S&P 500 jumped 1.8%. to 5,767.57, while the Dow Jones Industrial Average rose 1.4% to 42,583.32. The Nasdaq composite closed 2.3% higher, at 18,188.59.

Despite the gains, the benchmark S&P 500 has lost 1.9% so far this year out of concerns that a trade war could hinder economic growth and increase inflationary pressures.

Gains on Monday were broad, with 84% of stocks within the S&P 500 ending higher. Nearly every sector within the index rose.

Technology stocks helped lead the way. The stocks are among the most valuable on Wall Street and tend to have an outsized impact on the broader market’s direction.

Nvidia rose 3.2% and Apple added 1.1%.

Tesla climbed 11.9% for the biggest gain among S&P 500 stocks. The electric vehicle maker is still down about 31% for the year.

Wall Street has several economic updates this week. Business group The Conference Board releases its consumer confidence survey for March on Tuesday. On Friday, the U.S. government releases the personal consumption expenditures price index for February, a measure of inflation closely watched by the Federal Reserve.

The Fed started cutting its benchmark interest rate at the end of 2024 but is cautious about inflation, which is just above its 2% goal. Those cuts came after the central bank raised interest rates in order to cool inflation from a two-decade high.

Lower interest rates can ease borrowing costs and help give the economy a boost, but they can also push inflation higher.

In other dealings early Tuesday, U.S. benchmark crude oil rose 13 cents to $69.24 per barrel. Brent crude, the international standard, climbed 13 cents, to $72.50 per barrel.

The U.S. dollar fell to 150.59 Japanese yen from 150.70 yen. The euro rose to $1.0803 from $1.0802.

Source: AP

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Warren Takunda

Economic

Asian stocks stumbled on Tuesday, dragged by a slide in Chinese tech shares after a strong rally, while investors weighed the prospect of narrower-than-feared U.S. tariffs and the dollar hovered near three-week highs after upbeat economic data.

Investors have been focused on the impending reciprocal tariffs promised by U.S. President Donald Trump and its impact on the global economy as trade war fears grip markets.

Trump said on Monday automobile tariffs are coming soon even as he indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks, suggesting some room for negotiations.

That led to an exuberant risk-on reaction overnight. The S&P 500 closed at its highest in over two weeks, while a rally in tech stocks led Nasdaq up over 2% on Monday.

Asian stock bourses initially joined in on Tuesday morning but by mid-afternoon the relief rally looked set to fizzle out. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.35% lower ahead of European open.

European futures were down 0.24%, while S&P 500 and Nasdaq futures inched lower.

Charu Chanana, chief investment strategist at Saxo, said the high degree of uncertainty would make business planning extremely difficult.

"While markets can react to every tariff headline, businesses cannot. Businesses need clarity - and the lack of it could weigh on earnings soon," Chanana said.

Kyle Rodda, senior financial markets analyst at Capital.com, said there was still a need to see the full detail of what the tariffs would entail, and whether they represented the full extent of the Trump administration's "bid to shake up the global trading system."

"I don't think we are out of the woods completely yet."

Hong Kong's Hang Seng index fell 1.8%, as tech stocks led a broad selloff, with Xiaomi's $5.5 billion upsized share sale triggering concerns about stretched valuations across the market.

"Xiaomi's placement is only an 'excuse' for the market decline in general, after this round of a 6,000-point rally," said Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong, referring to strong rally in Hang Seng this year.

The Hang Seng is up 17% this year, still the best-performing major stock market in the world on AI bets after startup DeepSeek's sparkling debut.

DATA LIFTS DOLLAR

The dollar hit a three-week high against the yen at 150.95, after jumping 0.9% in the previous session, while hovering at its strongest since March 6 at $1.0781 per euro after stronger-than-expected U.S. economic data.

Data showed S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month from 51.6 in February. A reading above 50 indicates expansion in the private sector.

The PMI would suggest the economy was regaining speed after hitting a soft patch halfway through the first quarter. But so-called hard data, including retail sales and the employment report, have hinted at cracks in the foundation of the economy.

The strong dollar also cast a shadow across emerging markets. Indonesian rupiah sank to its lowest level since June 1998 during the Asian financial crisis on mounting concerns over the country's fiscal health.

Investor attention will now be on the size of the reciprocal tariffs to be announced next week as well as which countries will be targeted by the Trump administration.

Oil prices were little changed on Tuesday after rising 1% in the previous session as investors weighed the impact of Trump's announcement of tariffs on countries buying oil and gas from Venezuela.

Brent crude futures were up 2 cents at $73.02. U.S. West Texas Intermediate crude futures was flat at $69.11.

Gold was steady at $3,015.87 per ounce after a Federal Reserve official signalled a cautious stance on interest rate cuts this year.

Source: Reuters

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Warren Takunda

Economic

It's back to politics for the British Pound as the UK's balooning debt burden and falling growth rates come into focus at the Spring Statement.

What was supposed to be a simple update of forecasts from the Office for Budget Responsibility will instead be another budget, where cuts to spending will be announced.

"I think the market is underappreciating the risk on the UK budget," says W. Brad Bechtel, Global Head of FX at Jefferies LLC.

Rising debt, falling growth and the promise of further tax hikes in future budgets are hardly fertile grounds in which to plant the seeds of a sustained rally in the Pound.

"GBP/USD had started to move lower off of the recent 1.3000 area highs but is now holding in around 1.2950, not too far from YTD highs. Risk is to the downside here," says Bechtel.

Rachel Reeves, the chancellor, is preparing to announce about £15 billion worth of cuts to public spending in her spring statement alongside a significant downgrade to the country's growth forecasts.

Tax hikes announced in October are blamed for falling growth and disappointing tax revenues in recent months. At the same time, rising debt servicing costs mean the government won't meet its debt rules unless it either raises taxes further still or cuts spending.

"The UK is suffering from low growth and a rising bill for welfare and health care," says Steven Bell, Economist at Columbia Threadneedle.

Pound Sterling Faces Up to Budget Risks_1

Above: Recent public finances data shows the government is borrowing more than was forecast by the OBR.

Reeves has targeted some welfare spending for cuts, but the risk is she won't go far enough as she is expected to merely reduce public spending increases from 1.3% a year over the course of this parliament to about 1.1%, which will save about £5 billion.

"The £5BN in cuts announced last week is merely a reduction in the increase. To restore it to the level of 4 years ago would require £20BN in cuts," says Steve Bell, an economist at Columbia Threadneedle.

"More reform is needed. It is painful but the UK has seen similar reductions before. Moreover, reform would mean more people in work which would further improve public finances," he adds.

Ahead of the Spring Statement, the Pound-to-Euro exchange rate is at 1.1964, in the middle of a range it has been in since last October. The Pound-to-Dollar exchange rate is at 1.2910 and looks to be paring recent advances.

UK debt costs have risen amidst the recognition that inflation is rising and the UK will issue significant amounts of debt to fund its spending. Unless Reeves convinces the market she will contain spending, there is a risk of debt costs spiral, and the UK will enter a fiscal emergency.

Most analysts agree Wednesday's Spring Statement is too soon to see such a deterioration, but that inaction will nevertheless confirm a reckoning is coming.

"Reeves will be announcing several billion GBP of cuts to public spending and welfare in the spring statement on the budget, but will it be enough? Not sure we get a Liz Truss moment again, but it feels like we are very close once again," says Bechtel.

Typically, rising bond yields support the currency as it means foreign investors will see better returns on their capital, but during the Liz Truss 'mini-budget', we saw yields surge and the Pound drop.

This breakdown in correlation reflected collapsing confidence in the UK's fiscal picture, and Reeves will be wary of a similar outcome.

For this reason, she will move cautiously. Some economists warn that this caution means bigger decisions will have to be made down the road.

On taking Power, Reeves and Prime Minister Keir Starmer immediately began the task of laying the groundwork for a series of significant tax hikes, with economists saying the messaging triggered an immediate drop in confidence amongst households and businesses.

This caution meant the UK economy dropped from the fastest growing in the G7 when Labour took over to one of the laggards.

Pound Sterling Faces Up to Budget Risks_2

Above: The ten-year bond yield - crucial benchmark of UK borrowing costs - is higher now than it was following Liz Truss's mini-budget.

And there is little sign of recovery: a new survey from KPMG released on the eve of the Spring Statement shows households are increasingly pessimistic about the state of the economy.

More than half of the public now believe the economy is worsening, and just one in 10 believe growth is improving, according to KPMG. 58% of people surveyed said the economy was going in the wrong direction, up from 43% before Christmas.

Households are now cutting back spending and saving more, which will further damage growth prospects. Respondents said they were eating out less, spending less on clothing, and ordering fewer takeaways.

The Bank of England forecasts inflation will rise further in the coming weeks but notes upside risks to its forecasts as it is unsure about the extent to which businesses will pass on the cost of higher taxes to consumers.

From next week, firms will pay higher National Insurance (NI) and minimum wage bills, while facing the prospect of new U.S. import tariffs. 82% of firms will be impacted by just the NI rise, warns the British Chambers of Commerce (BCC).

"Businesses are feeling battered and bruised by the heavy cost pressures looming within days," says Shevaun Haviland, Director General of the BCC.

"I’m afraid to say that the outlook for the UK is grim. High taxes will go up further, the health and welfare bill will squeeze other public spending, growth may improve a little in the medium term but will remain subdued. Inflation should fall substantially in 2026, and interest rates should go down too but it'll be a hard grind," says Bell.

Source: Poundsterlinglive

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Benjamin Carter

The Bitcoin price has fallen below $80,000, pulling the wider crypto market down along with it. Roughly $1 trillion has vanished from the market in just one month. Concerns about inflation and uncertainty around the Federal Reserve’s next move have made investors hesitant. This isn’t just Bitcoin’s struggle—other major cryptocurrencies are also under strain. Aptos crypto, for example, is testing its key $5.1 support level, which has previously served as a safety net.

While some digital assets are losing ground, others are preparing for what could be significant changes. BlockDAG (BDAG) is one of those projects. Over the next 100 days, several major developments could reshape its position in the market. A final beta testnet launch, an important keynote event, and anticipated exchange listings are on the schedule—each sparking talk that BDAG could reach $1 soon. With a 2,380% increase so far, BlockDAG is gaining attention as one of the best long term crypto options today.

Bitcoin Price Drops as Investors Await Federal Reserve Signals

The Bitcoin price has dipped below $80,000, contributing to a larger sell-off that has erased $1 trillion from the crypto space over the past month. This decline has been fueled by persistent inflation worries. BlackRock’s CEO Larry Fink has warned that rising trade disputes could push costs higher, making things more complicated for the Federal Reserve’s approach to monetary policy.

Although February’s inflation numbers hinted at some relief, many analysts believe tariffs and unstable markets could keep inflation elevated for longer. Investors are holding back, waiting for clear direction from either the Fed or the White House. Stock markets have shown some signs of recovery, but the Bitcoin price—and crypto markets in general—haven’t yet regained meaningful momentum.

Aptos Crypto at a Crossroads as $5.1 Support Gets Tested Again

Aptos crypto is currently challenging its long-standing support level of $5.1, a price that has previously held up during past declines, including back in February. Despite noticeable accumulation over the past six weeks, Aptos has not been able to build upward momentum.

Meanwhile, negative funding rates have risen again, reaching levels similar to those seen a month ago. This suggests a large number of traders still anticipate more downside.

Even so, the Aptos crypto network itself remains steady. Its total value locked (TVL) and stablecoin market cap are hovering near their highest recorded levels. Demand remains muted, but many traders are closely watching for potential signs of a recovery—or an indication that the downtrend will continue.

BlockDAG’s Next 100 Days Could Redefine Its Path—Key Developments Approaching

Crypto projects often experience pivotal cycles, and BlockDAG appears to be entering one now. The project has already raised $206 million through its presale, distributing 18.8 billion BDAG coins and gaining 2,380% since its initial batch. What’s coming next, however, has the community paying close attention.

On March 28, BlockDAG’s final beta testnet is set to launch. This event marks the last significant technical milestone before a full system rollout. In the crypto world, testnets are often a signal that a project is nearing operational readiness, and this could be BlockDAG’s turning point.

Adding to the anticipation, Keynote 3 is scheduled for the same day. Speculation is growing that the event may announce the long-awaited mainnet launch date, new exchange listings, or even institutional partnerships. Many in the crypto space believe that BlockDAG is becoming one of the best long term crypto projects to watch.

Meanwhile, demand for BDAG is surging. Batch 27 is currently priced at $0.0248, and each subsequent batch pushes the price higher. Some analysts are predicting BDAG could reach $1 after these upcoming milestones are achieved, a dramatic leap from its early presale price.

If exchange listings go live and interest continues to grow, the gap between the current price and the $1 target may close much faster than anyone expects. The next 100 days are likely to determine whether BlockDAG’s early supporters are rewarded or whether others will have missed the opportunity.

Final Thoughts

The Bitcoin price remains unpredictable as inflation fears and the Federal Reserve’s pending decisions weigh on market sentiment. For now, crypto markets seem locked in a cautious holding pattern, with Bitcoin waiting for its next catalyst.

Aptos crypto also finds itself at a critical juncture. Its $5.1 support is holding, but weak demand and negative funding rates are raising concerns. A recovery is possible if momentum returns, but traders remain divided.

BlockDAG, on the other hand, is moving toward what could be a defining phase. The final testnet, an important keynote, and potential exchange listings are all drawing interest. With supply decreasing and several major events ahead, many see BDAG as the best long term crypto play on the table right now.

Source: CryptoSlate

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Henry Thompson

Technical Analysis

Financial markets entered Tuesday on a subdued note, with the Asian session notably quiet. While US stocks managed a rebound overnight on speculation that the April 2 “Liberation Day” tariff rollout might be narrower in scope than initially feared, sentiment failed to fully carry into Asia. Equity indices across the region were mixed, reflecting ongoing investor caution. In the currency markets, major pairs remained trapped within yesterday’s ranges, signaling a broader wait-and-see mode among traders.

Yen is seeing some mild recovery after Monday’s selloff, partially supported by signals from BoJ’s latest January meeting minutes. The central bank reaffirmed its readiness to tighten policy further. Still, external developments—particularly the uncertainty over global trade and US tariffs—are making the policy path less clear, forcing BoJ to move with greater caution in coming months.

Looking ahead to the European session, Germany’s Ifo Business Climate data will be watched. Still, most of the optimism linked to Germany’s fiscal expansion appears to be already priced in. Unless there’s a sharp upside surprise, the report may not trigger much market movement.

Later in the day, US Consumer Confidence figures are in focus. Expectations are for a continued decline, reflecting growing concerns over the economic fallout from reciprocal tariffs. Yet, this deterioration in sentiment has become a familiar theme, and its market impact may also be muted unless the drop is significantly worse than expected.

What investors truly crave are concrete details surrounding Trump’s tariff due next week. Until then, markets are likely to remain rangebound and headline-driven. With such a pivotal policy move on the horizon, traders are understandably reluctant to take strong directional bets. That has kept volatility suppressed for now, even as the risk environment remains fragile underneath the surface.

Technically, a major focus now is USD/JPY, which has extended the rebound from 146.52 short term bottom this week. Strong resistance is expected from 150.92 support turned resistance, and 55 D EMA (now at 151.08) to limit upside. However, firm break of this zone will argue the fall from 158.86 has completed, and turn near term outlook bullish for stronger rebound. The next move in USD/JPY would determine the overall tone of Yen in the markets.

In Asia, at the time of writing, Nikkei is up 0.56%. Hong Kong HSI is down -1.99%. China Shanghai SSE is down -0.05%. Singapore Strait Times is up 1.11%. Japan 10-year JGB yield is up 0.028 at 1.574. Overnight, DOW rose 1.42%. S&P 500 rose 1.76%. NASDAQ rose 2.27%. 10-year yield rose 0.079 to 4.331.

BoJ minutes signal readiness to tighten further if outlook holds

Minutes from BoJ’s January 23–24 meeting revealed a growing consensus among policymakers that further tightening would be appropriate, provided the current economic and price outlooks hold.

While the central bank raised policy rate to 0.5%, members acknowledged that real interest rates remained “significantly negative”, ensuring “accommodative financial conditions would be maintained.”

However, the path ahead is clouded by global uncertainty. While BoJ held rates steady at its latest meeting last week, it flagged increasing risks from escalating US tariffs.

Nevertheless, Governor Kazuo Ueda emphasized that stronger-than-expected wage growth and persistent food price inflation could keep upward pressure on underlying prices, indicating that the case for another rate hike remains very much alive.

Fed’s Bostic sees just one rate cut in 2025, warns tariffs may reinforce inflation

Atlanta Fed President Raphael Bostic said in a Bloomberg interview that he’s now projecting just one cut by year-end, down from his earlier expectation of two.

Bostic explained the shift was due to his view that inflation will be “very bumpy and not move dramatically and in a clear way to the 2% target”. With inflation unlikely to return to target until 2027, he believes the path to neutral must also be delayed.

Bostic also expressed concern about the inflationary impact of rising tariffs. While such measures are often assumed to cause a one-off increase in prices, Bostic suggested the current environment could be different.

In his view, businesses and consumers may have grown more tolerant of elevated inflation following the pandemic, making price hikes more likely to stick. He noted that many business leaders now feel confident about “a complete pass-through” of higher costs on to customers without fear of losing market share.

BoE’s Bailey calls for trade cooperation and embraces AI as growth catalyst

BoE Governor Andrew Bailey urged greater international cooperation to resolve growing strains in the global trading system. In a speech overnight, he pointed to the disruptions caused by US President Donald Trump’s trade policies, emphasizing that resolving these challenges requires “multilateral setting rather than set tariffs bilaterally”.

In a more optimistic tone, Bailey also pointed to artificial intelligence as a transformative force for the UK and global economy. Comparing AI to electricity in the early 20th century, he said the technology could meaningfully raise growth and per capita income over time. He called for policy support to facilitate AI’s development as the “most likely general purpose technology,” capable of driving broad-based economic gains in the years ahead.

ECB’s Escriva warns of extreme uncertainty and skewed growth risks

In remarks delivered overnight, Spanish ECB Governing Council member Jose Luis Escriva highlighted that “growth risks are more downside than upside.” While he acknowledged that supportive fiscal policy could offer some near-term uplift, he stressed that the broader risks — particularly to the downside — are dominating the economic outlook.

Escriva painted a grim picture of the current global backdrop, describing it as “extremely uncertain.” He noted that today’s uncertainty global index levels are at their highest since records began — exceeding those during the Covid-19 pandemic, the war in Ukraine, the 9/11 attacks, and even the peak of the Great Financial Crisis.

Despite the fact that worst-case, disruptive scenarios have yet to materialize, Escriva emphasized that ECB must be “readier than ever” to revise its forecasts and relevant action should conditions change”.

Looking ahead

German Ifo business climate ins the main focus in European session. Later in the day, US will release consumer confidence, house prices and new home sales.

USD/CAD Daily Outlook

Range trading continues in USD/CAD and intraday bias remains neutral for now. Overall, price actions from 1.4791 are seen as a corrective pattern. On the upside, break of 1.4541 will extend the second leg from 1.4150 to retest 1.4791 high. On the downside, break of 1.4238 will argue that the third leg has already started through 1.4150 support.

In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.