The Federal Reserve has announced that progress in bringing inflation down to its 2% target has been slow. This suggests that any interest rate cuts are unlikely to happen until later this year at the earliest. Initially, investors had predicted around six quarter-of-a-percentage-point cuts in 2024, but have since scaled back their expectations.
In response to the announcement, the yen experienced a significant rebound, leading to speculation that authorities may have intervened to support the currency for the first time since 2022. The yen had dropped to a 34-year low of 160 to the dollar following the Bank of Japan’s decision to keep its benchmark interest rate unchanged between zero and 0.1%. Despite raising the rate from minus 0.1% in March, there was no clear indication of when it might raise rates again. Additionally, no plan was presented to significantly reduce bond-buying activities.