2025/03/22 - FED and BOJ both holds rate

United States

- FED holds rate again at 4.25-4.50%. Future rate cuts for this year still remains at two times. Dot plot reveals more members chose to hold rate or lower for just once this year. Became hawkish compared to last Dec.

- GDP growth rate for 2025(2.1% -> 1.7%), Core PCE inflation(2.5% -> 2.8%), unemployment rate(4.3% -> 4.4%) Deflationary pressure sighted.

- Let's remeber this fact. Dot plot is only released at March, June, September and December. 

- From April, FED will slow down the speed of B/s runoff. Amid onging process of lifting government's borrowing limit. 

- Reduction in amount of QT. Monthly cap of treasuries will be allowed to mature and not reinvest will be from 250billion $ to 5billion $ per month. MBS monthly cap will hold steady at current 35billion USD per month. 

- FED officials want MBS off their B/S. Powell said, it is possible for after termination of QT, MBS will be allowed to retire off and not be reinvested

- FED officials say there is still some excess liquidity from COVID 19. And there is still some more to go even though QT started at mid 2022.

more dots moving upwards

United States Tariffs

- The United States raised tariffs on imports of steel and aluminium to 25%, effective last week, without exemptions. Washington is expected to announce auto tariffs on April 2, alongside a more sweeping agenda of reciprocal tariffs.

 

Japan

- BOJ holds rate at 0.50%. BOJ to spend more time gauging the impoact of Trump's tariffs on eport-dependent economy. 

- Japan's wage and price conditions are strong. Will stay data dependent. 

- Board voted unanimously to maintain the bank's short-term policy rate at 0.50%

- BOJ inflation target is 2%. Same as United States.

- Many of Japanese conglomerates have met union demands for substantial wage hikes for a third consecutive year, seeking to help workers cope with inflation and retain staff amid labour shortages. Spring Labor Negotiation. 

- Rengo, Japan's largest labour union umbrella group with 7 million members, will release a preliminary report on agreed terms on March 14. Its unions were seeking an average hike of 6.09%, up from 5.85% last year.

 

Korea

- Issues in Korean stock market: Paid-in Capital increase of Samsung SDI and Hanwha Aerospace. Hanwa Aero announced the largest amount of Paid-in Capital increase in Korea's Financial Market history. Around 3.6 trillion won. 

 

Germany

- The German Parliament narrowly approved a plan on Tuesday to loosen government borrowing limits. allowing it to spend heavily on defense and infrastructure to offset America’s pivot away from Europe and try to end years of economic stagnation.

- Current limit of yearly borrowing is 0.35% of GDP. If the plan is finally passed, it will create an exemption from the debt brake for all spending on defense above 1% of GDP. Plan needs to pass Federal Council of the States on Friday before it can go into effect. 

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USD/KRW exchange rate: 1,463.32

USD/JPY exchange rate: 149.31엔

USD/CNY exchange rate: 7.2486위안

CNY/KRW exchange rate: 201.84원

DXY: 104.09

 

US Treasury 30Y yield: 4.591%

US Treasury 10Y yield: 4.249%

US Treasury 2Y yield: 3.953%

 

KTB 30Y yield: 2.546%

KTB 10Y yield: 2.803%

KTB 2Y yield: 2.666%

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