Federal Reserve to Keep Rates Unchanged in June 2025

Economic

Forex

Summary:

Federal Reserve to maintain interest rates; market stability expected. Cryptocurrencies may see muted reactions with unchanged rates. Bond futures reflect a rate cut anticipation by September 2025.

Federal Reserve to Keep Rates Unchanged in June 2025

The Federal Reserve is expected to leave interest rates unchanged during its June 2025 meeting, with a 98% probability according to Polymarket.

Economic stability hinges on the Federal Reserve's rate decision, affecting traditional and cryptocurrency markets. Market consensus anticipates no immediate changes, aligning with the broader economic outlook.

The Federal Reserve's Federal Open Market Committee, chaired by Jerome Powell, is expected to keep the fed funds rate stable between 4.25%–4.50%. This forecast is supported by prediction markets and bond futures, which suggest minimal volatility in both crypto and traditional markets. Key players in the financial industry express that this predictable decision reflects ongoing economic stability efforts.

Derek Tang, Co-founder, LHMeyer, stated: "It’s hard for the Fed to have a lot of certainty about its forecast right now, because so many things could change between now and the end of the year."

Maintaining current rates has immediate effects on markets. Crypto tokens like Bitcoin and Ethereum generally remain stable in the absence of significant Fed surprises. Bond traders are gearing up for potential rate cuts later in the year, particularly around September 2025. Stability in cryptocurrency and traditional markets is likely amid consistent Federal Reserve policies. This pause in rate adjustments aligns with historical precedents where crypto markets see minimal disruption unless unexpected changes occur.

Cryptocurrency experts and market analysts have largely integrated these expectations into their forecasts. Lindsay Rosner of Goldman Sachs emphasized proximity to economic targets for 2025. These views underscore maintained regulatory stances with minimal adjustments anticipated in the rate context. Official Federal Reserve updates will be released soon after the current meeting, detailing economic outlooks and policies heading into the third quarter of 2025.

While stability is currently expected across both types of markets, any deviation from this prediction could result in immediate ripples affecting financial assets worldwide. As the Federal Committee convenes, stakeholders remain alert to the nuances that could shift economic dynamics and market trajectories. Experts highlight that consistent policies could pave the way for potential technological and financial innovation in the near future.

Source: CryptoSlate

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Daniel Carter

Central Bank

Economic

Policy rates left unchanged

Bank Indonesia held its policy rate steady at 5.5%, in line with both our expectations and the Bloomberg consensus. In the accompanying statement, BI emphasised that global economic conditions and the stability of the Indonesian rupiah (IDR) remain key considerations for the future path of interest rates.

As anticipated, the central bank maintained a cautious stance amid ongoing tariff uncertainties and rising geopolitical tensions in the Middle East, which could trigger a risk-off for emerging market currencies like the IDR.

However, the overall stance remained dovish as the governor repeatedly highlighted that the domestic economy needs support and bank lending rates need to come down.

Growth and inflation dynamics support further rate cuts

We believe the macro environment remains well-positioned for BI to cut rates later this year to support economic growth, following a slowdown in first quarter GDP to 4.9% year-on-year, down from 5.0% in the previous quarter. The deceleration was primarily driven by weaker investment activity, reflecting heightened uncertainty surrounding tariff policies.

To cushion the economy, the government has rolled out a fiscal stimulus package worth US$1.5bn, including doubled wage subsidies, transport fare discounts, and direct cash and food assistance. While these measures may help stabilise near-term consumption, they are unlikely to spur a meaningful recovery in capital expenditure.

Meanwhile, CPI inflation has eased toward the lower end of BI's target range and is expected to hover around 2% for the year, primarily driven by lower food prices and weaker growth. While higher crude oil prices are a risk to CPI inflation, the magnitude of impact is relatively low when compared to the rest of the region. A 15% increase in oil prices could add about 0.2% to CPI inflation, leaving enough room still within BI's target of 1.5-3.5%.

With real policy rates still close to 4%, BI is still likely to deliver considerable easing of 75bp by the first quarter of 2026. Rising risks to growth from tariffs and an uncertain investment climate, combined with domestic policy uncertainty, increase the risks of higher-than-expected rate cuts.

BI may use windows of currency strength to cut rates more opportunistically

We remain less concerned about Indonesia's current account balance, even as export growth slows, given that import demand is also likely to weaken. While FDI inflows remain subdued, portfolio investments – particularly in the bond market – picked up pace in May.

The recent appreciation in the IDR appears to be less driven by direct BI intervention, as FX reserves remained largely unchanged, suggesting the central bank is comfortable with current levels – provided depreciation pressures are contained by positive foreign inflows and a weaker USD backdrop.

Looking ahead, while the sustainability of large inflows into Indonesian bonds remains uncertain due to persistent fiscal risks, the broader USD weakening trend should offer support. In this context, BI may use windows of currency strength to cut rates more opportunistically.

Source: ING

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Gerik

Economic

Energy

AI Surge Triggers LNG Race in Southeast Asia

Amid surging electricity demand from next-generation data centers and population growth, global energy giants are turning to Southeast Asia’s gas reserves to bridge the widening supply-demand gap. Malaysia and Indonesia are at the heart of this pivot, as the region’s leaders emphasize local production and energy resilience to power digital transformation and industrial growth.

At the Energy Asia 2025 Conference in Kuala Lumpur, Shell announced a fresh investment of RM9 billion ($2.12 billion) in Malaysia over the next two to three years. The move aligns with projections showing a 20% decline in regional gas production by 2035, which Shell CEO Wael Sawan emphasized must be backfilled — primarily through LNG, given the region’s gas-centric infrastructure.

The surge in LNG interest comes at a time when AI technologies, particularly data centers, are placing unprecedented pressure on national grids. According to Petronas CEO Tengku Muhammad Taufik, global electricity demand from data centers could more than double to 945 TWh by 2030, significantly reshaping regional energy priorities.

European, Japanese, and U.S. Firms Deepen Strategic Stakes

Beyond Shell, other major players are moving fast. TotalEnergies has increased its stake in Malaysian gas assets via a deal with Petronas, reflecting the French firm's broader shift toward profitable conventional fuels after a period of energy transition volatility in Europe. TotalEnergies CEO Patrick Pouyanne cited Southeast Asia’s population growth and economic expansion as core drivers for the investment.

Meanwhile, Italy’s Eni and Petronas are finalizing a joint venture agreement covering gas exploration across Malaysia and Indonesia, due for signing before year-end. Japan’s Inpex is also reinforcing its regional footprint, pursuing exploration in six blocks offshore Sarawak and Sabah, while simultaneously pushing forward with Indonesia’s Abadi LNG project.

U.S. major ConocoPhillips signaled renewed interest in Sabah after exiting the WL4-00 project in Sarawak. CEO Ryan Lance confirmed upcoming investment plans, underscoring how shifting geopolitical risks are prompting a “local production for local consumption” strategy, particularly in Asia-Pacific markets.

Gas as the Cornerstone of Energy Transition and AI Power

With countries seeking cleaner alternatives to coal without compromising energy stability, natural gas has emerged as a key transitional fuel, offering lower emissions and reliable generation for high-load infrastructures like data centers. According to S&P Global Vice Chairman Daniel Yergin, gas now holds “a much bigger profile” than in previous years and will be essential for meeting near-term and long-term energy demands.

Analysts agree that Southeast Asia is quickly becoming the new frontier for LNG expansion, balancing affordability, availability, and clean energy goals. As LNG replaces coal across power grids, it also supports a digital economy increasingly reliant on high-intensity computing powered by AI — sectors that cannot afford intermittent supply or long renewable ramp-up timelines.

Infrastructure, Investment, and Energy Security

Despite positive momentum, the LNG boom faces logistical and regulatory hurdles. Infrastructure expansion, environmental concerns, and local policy shifts will challenge rapid deployment. However, the coordinated efforts of global energy companies and national firms like Petronas suggest a unified front in establishing the region as a gas hub for the AI era.

In summary, Southeast Asia is not just a resource basin but a strategic node in the future global energy matrix — where fossil fuel pragmatism, digital growth, and geopolitical recalibration intersect. As Shell, TotalEnergies, Inpex, and others compete for a foothold, the outcome will shape not only regional energy flows but also the pace and stability of the global AI-powered transformation.

Source: Reuters

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Economic

Program Suspension Signals Funding Pressures and Structural Flaws

At least six Chinese cities, including Zhengzhou, Luoyang, Shenyang, Chongqing, and the Xinjiang region, have temporarily halted car trade-in subsidies in June, citing either funding exhaustion or administrative adjustments. This development comes just months after Beijing unveiled a ¥300 billion ($41.7 billion) stimulus effort aimed at rejuvenating household consumption through subsidies for vehicles, electronics, and home appliances. Local governments had already received ¥162 billion of this allocation by June.

The sudden pause, amid what officials call overwhelming demand, casts a shadow over the initiative’s execution. More than 4 million applications had been submitted by the end of May, a surge that exceeded government expectations and rapidly depleted initial funds. Retail sales in May reflected a 6.4% year-on-year increase, partially attributed to the subsidy campaign. However, without immediate replenishment of funds, this upward consumption trend could reverse in the coming months.

“Zero-Mileage Used Cars” Expose Exploitation of Subsidy System

One major flaw driving the premature depletion of funds has been the manipulative practice of “zero-mileage used cars”—vehicles that are technically new but registered as used to qualify for trade-in subsidies. This loophole has allowed dealerships to offload unsold inventory under the guise of second-hand sales, collecting state support while undermining the program’s intent.

Local media and regulators, including the People’s Daily and Dahe Daily, have called for greater oversight. Even Great Wall Motor’s Chairman Wei Jianjun publicly condemned the practice. In response, Beijing’s Ministry of Industry and Information Technology (MIIT) summoned automakers to demand an end to price wars and unethical marketing tactics, reflecting broader concerns over eroding industry profitability.

Stimulus Fatigue and Economic Implications

The halt in subsidies underscores not only administrative inefficiencies but also the fiscal limits of demand-driven stimulus in an economy still grappling with a housing downturn, weak wage growth, and elevated youth unemployment. While officials at the National Development and Reform Commission (NDRC) have insisted that the program will run through 2025, the lack of a clear replenishment timeline until at least July raises the risk of short-term sales contractions.

Analysts warn that cities pausing their programs may see auto sales decline in Q3, eroding part of the momentum seen earlier this year. This pause could also dent consumer confidence if buyers begin to view subsidies as unreliable or politically volatile. Moreover, continued industry-wide price wars, despite regulatory warnings, threaten to compress margins and trigger instability within China’s auto sector, the largest in the world.

Looking Ahead: Structural Reform vs. Temporary Relief

While the consumer stimulus via subsidies has been effective in the short term, the current suspensions highlight a broader need for structural reform over temporary relief. Calls for closing loopholes, improving transparency, and curbing speculative dealership behavior are gaining traction. However, unless the subsidy mechanism is recalibrated and better monitored, future rounds of funding may face similar misuse and exhaustion.

If properly managed, the next disbursement of funds—expected in July—could help sustain momentum in retail sectors. But without restoring public trust and addressing industry abuses, the program risks becoming another inefficient fiscal patch rather than a catalyst for long-term consumption revival.

In the short run, Beijing will need to balance macroeconomic stability with tighter subsidy discipline, ensuring that temporary stimulus does not lead to systemic distortion or eroded policy credibility.

Source: Bloomberg

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Gerik

Economic

Inflation Signals Complicate BOJ's Cautious Stance

The Bank of Japan’s decision to keep rates steady this week was expected, but its messaging has introduced a nuanced shift. BOJ Governor Kazuo Ueda warned of emerging upside inflation risks, particularly from sustained food price hikes and rising oil prices driven by Middle East tensions. While the BOJ remains focused on downside economic risks, particularly from U.S. tariffs expected to impact Japan’s exports more harshly in the second half of the year, Ueda’s comments highlighted that inflation is no longer purely a supply-side phenomenon.

Japan’s headline inflation hit 3.6% in April, well above the BOJ’s 2% target, and price pressures are broadening. Ueda acknowledged that a sustained rise in food prices—particularly rice and other staples—could change consumer expectations, potentially entrenching higher inflation.

Fuel and Food Price Effects Could Push Policy Shift

Rising fuel costs—linked to the Iran-Israel crisis and Donald Trump’s recent foreign policy decisions—are expected to push core consumer inflation up another 0.2 percentage points by autumn, according to Mizuho Securities. Combined with earlier food price increases, this surge could force the BOJ to revise up its inflation forecast at the July 31 quarterly report, potentially paving the way for an October rate hike.

JP Morgan economists also expect the BOJ to act in Q4 2025, noting that core inflation staying above 2% for several months could shift internal sentiment toward tightening. ING analysts further project that unless Japan’s trade negotiations with the U.S. deteriorate further, a rate hike could be viable before the end of the year.

Trade Tensions and Timing Dilemmas

President Trump’s tariffs continue to cast uncertainty over Japan’s export-dependent economy, derailing earlier market expectations for a July rate increase. The BOJ must now balance inflation containment against recessionary risk, particularly as May saw Japan’s exports contract for the first time in eight months.

Governor Ueda emphasized that the BOJ is not dismissing further rate hikes, but will wait for clarity on both the domestic and international front. This wait-and-see approach may lead to a prolonged pause in monetary tightening—unless inflation pressures deepen or the U.S.-Japan trade outlook improves.

Former BOJ policymaker Takahide Kiuchi echoed this sentiment, predicting the next hike might not occur until late 2025 or early 2026, depending on how the economic landscape evolves. Nonetheless, internal BOJ discussions appear increasingly focused on the second-round effects of inflation, particularly how price hikes are impacting consumer psychology.

Underlying Inflation Dynamics Under Watch

Recent BOJ reports have warned that rising staple prices are altering inflation expectations, which could drive broader and more persistent inflation. The doubling of rice prices and a general acceptance of price hikes by consumers suggest inflation is no longer viewed as a temporary disruption.

ING notes that the transmission of earlier commodity inflation to services and manufactured goods—as well as a pick-up in rents—supports the case for rising underlying inflation. If this trend persists, BOJ officials may have little choice but to act despite growth risks.

The BOJ's current stance reflects policy flexibility rather than inaction. While near-term hikes are unlikely due to tariff headwinds and growth uncertainty, the central bank is increasingly alert to the risk of falling behind the curve on inflation. The most likely window for policy tightening is October to December 2025, contingent on sustained inflation readings and geopolitical clarity. Until then, the BOJ will likely maintain its ambiguous forward guidance—balancing caution with readiness.

Source: Reuters

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Gerik

Economic

Forex

A Shifting Global Currency Landscape

Pan Gongsheng’s keynote speech comes at a time when global faith in the US dollar is under renewed pressure. With President Trump’s second term marked by volatile trade and economic policies, the dollar has depreciated sharply—dropping over 10% against the euro, pound, and Swiss franc. Investors, central banks, and multinationals are increasingly seeking alternatives. Pan seized this moment to reinforce China’s strategic currency vision: a diversified, multipolar world where no single currency holds unchallenged sway.

Pan emphasized that such a system—where sovereign currencies “co-exist, compete, and check and balance each other”—would reduce risks tied to overreliance on a single global currency. He echoed sentiment previously expressed by ECB President Christine Lagarde and cited growing discussions worldwide about diversifying currency exposure, especially among US trade partners seeking protection from dollar volatility.

Yuan’s Expanding Role and China’s Monetary Strategy

Pan confirmed that the yuan’s international use is rising, especially as US-China tensions prompt exporters and financial institutions to explore non-dollar settlements. The People’s Bank of China (PBOC) has shifted from supporting the yuan’s value to preventing excessive appreciation. After hitting its weakest level since 2007 in April, the yuan rebounded over 1% this quarter, reflecting shifting capital flows and changing investor sentiment.

To boost the yuan’s global appeal, Pan announced new initiatives in Shanghai to support financial liberalization. These include the creation of a yuan digital operations center, promotion of yuan-denominated offshore bonds, and development of yuan futures trading platforms. These moves aim to deepen liquidity, encourage cross-border use, and reinforce Shanghai’s role as a global financial hub.

Calls for IMF Reform and Super-Sovereign Currency Revival

Pan’s vision also includes a greater role for the IMF’s special drawing rights (SDRs)—an idea earlier championed by former PBOC Governor Zhou Xiaochuan. SDRs, a basket-based reserve asset created by the IMF, could evolve into a “super-sovereign currency”, mitigating the risks of sovereign-currency dominance and improving global financial stability.

However, Pan acknowledged that a lack of consensus and insufficient issuance of SDRs hinder their wider adoption. He called for regular, larger SDR allocations and urgent reform of the IMF’s quota system to reflect the rising influence of emerging markets. Currently, IMF governance continues to tilt toward advanced economies, which Pan and others argue is outdated given the global economic rebalancing.

Geopolitical and Economic Undercurrents

China’s ambition to reshape the global currency landscape has intensified amid escalating tariff risks, weakening dollar hegemony, and a broader shift in trade and investment flows. Some US exporters are already using alternative currencies like the yuan to hedge against dollar instability. These adjustments underscore a deepening trend toward currency regionalization and multi-currency transaction systems.

Pan further noted that the global cross-border payments system is becoming more diverse, as countries increasingly promote settlement in their own currencies. This trend—combined with digital currency innovation, central bank cooperation, and regional blocs—suggests the traditional dollar-centric framework is under structural pressure.

No Major Stimulus, but Continued Monetary Easing

Despite expectations, Pan refrained from announcing new stimulus measures during the forum. Unlike 2024—when the PBOC introduced a significant policy reform—this year’s approach was more reserved. Still, the PBOC recently cut interest rates and the reserve requirement ratio in May to support liquidity. Interbank borrowing costs fell to their lowest level this year, indicating short-term easing remains in play.

Meanwhile, benchmark bond yields have stabilized after previous deflation fears, aided by reduced trade tensions and halted central bank bond purchases.

Governor Pan’s vision of a post-dollar global order is no longer a fringe argument—it’s a reflection of evolving geopolitical realities and economic pragmatism. As China mobilizes to elevate the yuan’s status and works in tandem with institutions like the IMF, the world may indeed shift toward a competitive and more resilient multipolar currency regime. The speed and success of this transformation, however, will depend on both structural reforms at home and sustained multilateral engagement abroad.

Source: Bloomberg

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Daniel Carter

Economic

Political

Key Points:

● Main event: Germany and the US near a trade deal.

● Potential easing of tariffs noted by sources.

● No direct impact on crypto assets currently noted.

Germany-US Trade Agreement Progress

Chancellor Merz's statement on the forthcoming trade agreement underscores its potential significance in resolving existing tariff issues, potentially boosting trade activity between Germany and the US.

Germany, represented by Chancellor Friedrich Merz, anticipates the completion of a trade agreement with the United States by summer. The agreement seeks to ease tariff-related tensions, taking cues from a recent US–UK trade model. Merz emphasized the importance of "small steps" towards the deal's fruition in his remarks at the G7 summit. "We are approaching agreement in small steps. I assume that this agreement will be possible before the summer, before the summer break, and that we will then also be able to reach a similar agreement to the one concluded between the United States of America and the United Kingdom," said Friedrich Merz.

The pending trade deal, primarily involving tariff reductions, might positively affect both German and American businesses by easing financial constraints. Although the specifics on funding and institutional involvement remain undisclosed, the implications for trade flows are significant.

As credit to Merz's efforts, this aligns with his pro-business ideology and diplomatic drive. The trade dynamics, however, are detached from immediate impacts on the crypto market, including major digital assets like Bitcoin or Ethereum, within available data.

Statements from key opinion leaders in the crypto space, regulatory bodies, and the development community remain absent as of this assessment, with on-chain data unaffected. The anticipated agreement, while economically consequential, is largely detached from immediate crypto market movements.