Core Viewpoint - The focus of investors is shifting from the interest rate decision to the guidance on the future tightening path from the Bank of Japan, particularly comments from Governor Kazuo Ueda after the meeting [1][2]. Group 1: Interest Rate Expectations - The market anticipates the Bank of Japan will raise the overnight lending rate by 25 basis points to 0.75%, the highest level in thirty years [1]. - Nomura's analysis suggests that the rate hike decision alone may not catalyze further increases in yields, as the market has already priced in these expectations [1][2]. - There is skepticism regarding whether Ueda will indicate a significantly higher neutral rate than the current market pricing of 1.5% [2]. Group 2: Future Rate Guidance - Analysts believe that if the Bank of Japan fails to convey a faster tightening pace than the market expects, the meeting could be perceived as a "non-event" [1]. - The consensus indicates that the policy rate may reach 1.0% by mid-2026, and any signals of continued rate hikes in 2026 would not surprise the market [2]. Group 3: Market Reactions and Currency Implications - A simple rate hike may not be sufficient to support a stronger yen; Ueda would need to suggest an accelerated pace of rate increases to prevent yen depreciation [3]. - The current average rate hike pace since the end of negative interest rates is approximately every seven months, with market expectations for the next increase to occur by the third quarter of 2026 [3]. Group 4: Fiscal Policy Considerations - While the focus is on the central bank meeting, fiscal policy developments are also important, with key tax reform outlines and preliminary budget proposals expected around December 19 and 26 [4]. - The potential removal of income limits proposed by the Democratic Party for the People could lead to significant tax revenue losses, impacting yields and the yen [5]. - If the initial budget for fiscal year 2026 can be kept below 122.4 trillion yen, it may be viewed positively by the bond market; exceeding 125 trillion yen would have negative implications [5].

Core Viewpoint - The Bank of Japan is expected to raise its policy interest rate from 0.50% to 0.75% during the December monetary policy meeting, with a probability of approximately 90% priced in by the market [1][2][5]. Group 1: Interest Rate Expectations - Nomura Securities predicts that the Bank of Japan will likely emphasize that "real interest rates remain very low," indicating no dovish signals suggesting an end to rate hikes [1][6]. - A recent survey shows that 90% of economists anticipate a 25 basis point increase in the interest rate during the December 18-19 meeting, with expectations for rates to rise to 1.0% by September 2026 and a terminal rate forecast of up to 1.5% [1][2][8]. - Nomura believes that the timing for reaching a 1.0% interest rate should be in January 2027, rather than the market's priced-in expectation of September 2026 [1][10]. Group 2: Economic and Political Influences - The upcoming wage negotiations and concerns over the yen's depreciation are significant factors influencing the Bank of Japan's decision to raise rates [2][5]. - Political shifts, particularly the changing stance of Prime Minister Fumio Kishida regarding aggressive fiscal expansion, are also seen as supporting the case for rate hikes [5]. Group 3: Communication Strategy - The focus post-rate hike will be on how Bank of Japan Governor Kazuo Ueda manages market expectations during the press conference [6]. - Ueda may maintain a qualitative stance that "real interest rates are very low" and a quantitative estimate of the natural interest rate range between -1% and +0.5%, while keeping future adjustments flexible [7][9]. - The market has already priced in a very aggressive rate hike path, with indicators suggesting a terminal rate expectation that may be overly hawkish [8][9].

Core Viewpoint - The Trump campaign is accelerating its strategy regarding the Federal Reserve as the election approaches, focusing on potential candidates for the Fed chair position if Trump returns to the White House [2][9]. Group 1: Meeting Details - Scott Bessent, a former Treasury official and current economic advisor to Trump, hosted a private dinner with three former Fed officials to discuss potential successors for the Fed chair [2][3]. - The meeting shifted the discussion of potential Fed candidates from media speculation to a semi-public operation, with Bessent bringing a list of candidates including current Fed Governor Lael Brainard and former economic advisor Larry Kudlow [3]. Group 2: Candidate Perspectives - Lawrence Lindsey emphasized the need for the future Fed chair to establish accountability with Congress regarding inflation targets, suggesting a quantifiable approach to the 2% inflation goal [3][5]. - Kevin Warsh advocated for a strategic silence from the Fed, proposing a shift from forward guidance to data-triggered thresholds, while expressing cautious openness to returning to public office under specific conditions [4][8]. - James Bullard, known for his hawkish stance, proposed raising the long-term inflation target range to 2.5%-3% and suggested establishing a shadow FOMC to help the market digest policy differences [5][8]. Group 3: Candidate Recommendations - Lindsey supports Warsh for the Fed chair position due to his market trust and connections in Congress, while Warsh recommends Bullard for his academic authority and experience [6][7]. - Bullard suggests Lindsey as a candidate, arguing that an old-school hawk could quickly restore the Fed's credibility [7]. Group 4: Implications for the Market - The meeting's outcomes have led to immediate reactions in the market, with hedge fund managers adjusting their forecasts for interest rate cuts in late 2025 and the dollar index rising by 0.4% [9]. - Analysts warn that the meticulous preparation of Fed personnel by the Trump campaign could undermine the central bank's independence, making it a daily risk factor for traders [9]. Group 5: Next Steps - Bessent requested the three former officials to submit a joint memo by October 1, outlining an expanded candidate list, policy framework options, and key points for congressional hearings [8].

Core Viewpoint - Goldman Sachs economists suggest that the Federal Reserve may lower policy interest rates in September, three months earlier than previously predicted [1][2] Group 1: Interest Rate Predictions - Goldman Sachs has adjusted its rate cut forecast, indicating that the impact of tariff policies this year is slightly less than expected, while other deflationary forces are stronger [1] - Mericle estimates that the likelihood of a rate cut in September is "slightly above" 50%, with expected cuts of 25 basis points in September, October, and December, and further cuts in March and June 2026 [2][5] - The terminal rate forecast has been revised down to 3-3.25% from a previous estimate of 3.5-3.75% [2][4] Group 2: Inflation and Employment Outlook - Some Federal Reserve officials have hinted that if upcoming inflation data is not too high, they may support a rate cut in September [5] - Evidence suggests that the transmission effect of tariffs on consumer prices is lower than previously expected, with inflation expectations indicators showing a decline [5] - There are signs that anti-inflation factors are at play, including slowing wage growth and a decline in job vacancies, which may influence the Fed's decision on rate cuts [5]

Core Viewpoint - The Governor of the Bank of England, Andrew Bailey, highlighted significant uncertainty regarding the level of terminal interest rates [1] Group 1 - The Bank of England is facing challenges in determining the future trajectory of interest rates due to various economic factors [1] - Bailey emphasized that the current economic environment is complex, making it difficult to predict the ultimate peak of interest rates [1] - The uncertainty surrounding terminal rates could impact monetary policy decisions moving forward [1]

Group 1 - The European Central Bank (ECB) retains the policy space to initiate interest rate cuts within the next six months, as stated by François Villeroy de Galhau, a member of the ECB Governing Council [1] - Current market assessments indicate that inflation expectations remain moderate, which could justify further easing of monetary conditions in the next six monetary policy cycles if this trend continues [1] - The significant appreciation of the euro against major currencies has provided a hedging effect against rising international oil prices [1] Group 2 - Villeroy distinguishes between neutral interest rates and terminal rates, explaining that while they may converge under certain conditions, they serve different functions within the policy framework [1] - The geopolitical situation in the Middle East is identified as a new major uncertainty, with potential for dual-directional volatility [1] - The ECB is closely monitoring international oil price trends, but emphasizes that oil price fluctuations alone are insufficient to trigger policy responses unless they affect core inflation and inflation expectations [1] Group 3 - Regarding potential changes in US-EU trade relations, Villeroy assesses that a substantial escalation in trade tensions could exert downward pressure on eurozone economic growth through suppressed cross-border trade channels [2] - However, this impact is not expected to directly translate into upward inflationary pressures, consistent with previous ECB research on the transmission mechanism of imported inflation [2]

Core Viewpoint - The Bank of Japan should not pre-set a terminal interest rate during the rate hike process according to committee member Akira Noguchi [1] Group 1 - Akira Noguchi emphasizes the importance of flexibility in the Bank of Japan's approach to interest rate adjustments [1]

Core Viewpoint - The Bank of Japan should not pre-set a terminal interest rate during the interest rate hike process [1] Group 1 - The statement emphasizes the importance of flexibility in monetary policy as the Bank of Japan navigates interest rate adjustments [1] - It suggests that setting a predetermined terminal rate could limit the central bank's ability to respond to changing economic conditions [1] - The commentary reflects ongoing discussions about the appropriate approach to interest rate management in Japan's economic context [1]

Core Viewpoint - The European Central Bank (ECB) is nearing the terminal interest rate and does not see an urgent need to cut rates if the baseline scenario remains unchanged [1] Summary by Relevant Categories Monetary Policy - ECB Governing Council member Martins Kazaks indicated that the current interest rates are close to the terminal level, suggesting a pause in rate cuts unless there are significant changes in economic conditions [1]

高盛预计，欧洲央行将于今年7月达到终端利率1.75%，此前预期为9月的1.5%。 ...