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Deutsche Bank warns that the Federal Reserve's potential withdrawal of its liquidity backstop could jeopardize the dollar's status as a reserve currency, marking the most significant risk since World War II. Concerns about the reliability of Fed swap lines may prompt global de-dollarization, especially among Western allies, as countries like China and Russia continue to reduce their reliance on the US financial system. The Fed's role as the world's lender of last resort is crucial, and any hesitation to provide liquidity could lead to increased demand for dollars and destabilize US asset markets.
Deutsche Bank warns that the Federal Reserve's potential withdrawal of its liquidity backstop could jeopardize the dollar's status as a reserve currency, marking a significant risk since World War II. Informal discussions among European officials suggest concerns over the reliability of Fed swap lines, which allow global institutions to borrow dollars during financial stress. Such fears could drive a shift towards de-dollarisation among America's Western allies, especially if the Trump administration influences the Fed's actions.
Japanese companies have agreed to a 5.4% wage increase this year, according to the latest figures from the country's largest union group, Rengo. This marks the highest pay hike in 34 years, although slightly lower than the preliminary estimate of 5.46%. Rengo aims to extend this momentum to smaller firms as negotiations continue.
Japan's core inflation eased to 3.0% in February, down from 3.2% in January, driven by government subsidies for utilities and a decline in fresh food prices. Despite this deceleration, inflation remains above the Bank of Japan's 2% target, with rice prices soaring 81% year-on-year. The government is taking measures to alleviate the impact of rising costs on households, while underlying inflation suggests potential interest rate hikes in the near future.
US stock markets showed mixed results as tariff concerns eased, while the Australia 200 index rebounded after four weeks of losses, supported by labor data suggesting a potential interest rate cut by the RBA in May. Key economic indicators included unchanged Fed rates, softer retail sales, and a surprising surge in US housing starts. In the UK, inflation rose to 3.0%, prompting the BoE to maintain rates, while Japan's BoJ held rates steady amid global uncertainties.
The Bank of Japan is expected to gradually increase interest rates, supported by a projected rise in wages to 3.0% this year, up from 2.8% in 2024. Goldman Sachs anticipates that if wage growth aligns with these estimates, the BOJ will likely raise rates to 0.75% by July, maintaining a steady approach thereafter.
The Bank of Japan is expected to gradually increase interest rates, supported by a projected rise in wages to 3.0% this year, up from 2.8% in 2024. Goldman Sachs anticipates that if wage growth aligns with these estimates, the BOJ will likely raise rates to 0.75% by July, maintaining a steady pace of hikes thereafter.
The Bank of Japan is expected to gradually increase interest rates, supported by a projected rise in wages to 3.0% this year, which aligns with maintaining inflation around the 2% target. Goldman Sachs anticipates a rate hike to 0.75% in July, with further increases occurring approximately twice a year. Wage growth exceeding expectations could accelerate rate hikes, while slower growth may delay them.
The Federal Reserve is expected to maintain the federal funds rate at 4.25%-4.50% during its March meeting, reflecting a cautious approach amid mixed economic signals. Key indicators, including consumer sentiment and inflation trends, will influence future policy decisions, with potential rate cuts anticipated later in 2025 if economic conditions permit. Market reactions will focus on the Fed's tone and updated economic projections, particularly the "dot plot," which outlines members' expectations for future interest rates.
The Federal Open Market Committee (FOMC) is set to meet on March 18-19, 2025, with expectations to maintain the federal funds rate at 4.25%-4.50%. Economic indicators show mixed signals, with consumer sentiment at a 29-month low, while inflation trends are easing. Market reactions will focus on the Fed's tone and updated economic projections, particularly regarding future rate cuts, as investors seek clarity on the central bank's policy direction.
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fears over fed backstop could undermine dollar's reserve currency status
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17:21 27.03.2025
fed backstop concerns could jeopardize dollar's reserve currency status
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17:02 27.03.2025
Japanese companies agree to 5.4 percent wage increase in landmark negotiations
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05:23 21.03.2025
us stock markets mixed as australia 200 rebounds amid economic concerns
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05:09 21.03.2025
bank of japan expected to gradually raise interest rates amid wage growth
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bank of japan expected to gradually raise interest rates amid wage growth
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fed expected to hold rates amid mixed economic signals and global implications
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23:09 17.03.2025
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