Bank of Japan Holds Steady on Rates

The Bank of Japan (BoJ) has decided to keep its borrowing costs unchanged at 0.25%, following its policy meeting on Friday. This decision comes as a signal that the BoJ is not in a rush to increase interest rates further after its previous adjustment in July. The yen fluctuated following the announcement, strengthening later in the day as traders awaited Governor Kazuo Ueda’s press conference. Investors remain focused on whether the BoJ will signal any shifts in policy as inflation in Japan continues to accelerate.

China is considering the removal of some of its strictest home purchase restrictions to revitalise its struggling property market. Sources familiar with the situation suggest that mega cities, including Shanghai and Beijing, could soon relax rules that limit home purchases for non-local buyers. Property shares surged on the news as investors anticipated potential market recovery. These measures are seen as part of China’s broader efforts to support the property sector, which has been a significant driver of the economy for decades.

Global stocks extended their rally as the S&P 500 reached its 39th record high of the year. However, U.S. and European futures dipped slightly. Former U.S. Treasury Secretary Lawrence Summers expressed caution, stating that inflation may prevent the Federal Reserve from lowering rates as much as markets are currently predicting. Summers emphasised that inflationary pressures could limit the extent of future rate cuts, a concern shared by other market analysts.

Germany’s economy is expected to avoid a technical recession, though growth will remain sluggish through the third quarter. A Bloomberg survey of economists forecasts zero growth for Germany from July to September, with slight growth of 0.2% expected in the final quarter. This slow recovery highlights the challenges facing Europe’s largest economy, which has struggled with a prolonged downturn in its manufacturing sector. Economists remain cautious about Germany’s outlook, with ongoing concerns about the broader European economy.

• Eurozone Consumer Confidence: The latest data on consumer confidence in the eurozone is expected to provide insight into the region’s economic recovery. (3pm 20/09/24)
• ECB President Christine Lagarde: Lagarde will deliver remarks at a conference, with market participants paying close attention to any indications of future monetary policy changes. (4pm 20/09/24)