Financial Industry Under Scrutiny: Regulatory Bodies Probe Banks' Activities
In this week, several key central banks are set to unveil their policy stances, with the US Federal Reserve taking center stage on Wednesday evening. As the new year dawns, Trump's inauguration is poised to have a significant impact on the Federal Reserve's moves for 2023, according to Martin Pirkl, foreign exchange correspondent for Börsen-Zeitung, in the podcast 7TageMaërkte.
Although a 25 basis point rate cut in December seems likely, the Fed might hold off on raising rates at the beginning of the year to gauge Trump's announcements in his early days in the White House. "Many of his proposals are likely to boost inflation," suggests Pirkl.
The Bank of Japan could opt for a third rate hike this year, and a decision is being hotly debated among the central bankers— whether it will occur in December or another time. Meanwhile, the UK appears to be leaning towards a rate pause, but Bank of England governor Andrew Bailey has recently predicted four rate cuts by 2025, exceeding market expectations.
The podcast also touches upon the acquisition of About You by Zalando, a major shakeup in the fashion industry. Douglas, which will soon be back on the stock market, is scheduled to release its annual figures, while security concerns take center stage at the EU summit. The current episode of 7TageMaërkte offers coverage on these topics and other crucial events during calendar week 51.
Additional Insights:
- The US Federal Reserve's recent decision in May 2025 was a hold, maintaining the federal funds rate at 4.25-4.50%.
- The Bank of Japan focuses its monetary policies on stimulating inflation and economic growth, employing negative interest rates and large-scale asset purchases.
- Overall economic health indicators, such as employment rates, inflation levels, and GDP growth, strongly influence the US Federal Reserve's decisions.
The US Federal Reserve might hesitate to instate immediate rate increases in early 2023, as they wish to observe Trump's policy initiatives to assess potential implications on inflation, according to Martin Pirkl. In contrast, the Bank of Japan could further raise interest rates this year, with central bankers contemplating whether this hike will take place in December or another month.
