Kevin Warsh, chairman of the U.S. Federal Reserve. AFP/Yonhap News
Attention this week turns to interest rate decisions in the United States and Japan that could ripple through global financial markets.
The U.S. Federal Reserve holds a Federal Open Market Committee meeting on the 15th and 16th to decide whether to adjust its benchmark rate, currently at 3.5% to 3.75%. The Fed has left the rate unchanged at five straight meetings since January. But with concerns mounting over a prolonged Middle East war and a surge in international oil prices reviving inflation worries, some market watchers see a chance of a hike this time.
Even if the Fed stands pat, its policy stance is likely to lean hawkish. Investors will also watch the dot plot showing individual policymakers’ rate projections, the accompanying economic outlook, and a news conference by Fed Chair Kevin Warsh after the decision.
The Bank of Japan decides on rates at a monetary policy meeting on the 17th and 18th. With U.S. Treasury Secretary Scott Bessent pressing to halt the yen’s slide, a rate increase this month is seen as all but certain. Should the BOJ move, it would come three months after a 0.25 percentage point hike in June lifted the benchmark rate above 1%. Analysts say the timing of a further increase could be moved up as well, which may bring the unwinding of yen carry trades back into focus.
At home, the Bank of Korea releases a series of price statistics for August, including export and import price indexes and the producer price index. The figures will show how recent moves in the won-dollar exchange rate and international oil prices have fed through to prices.
A confirmation hearing on the 15th for Lee Hyung-il, the nominee for deputy prime minister for economy and minister of economy and finance, is another focus. Lee, currently first vice minister of economy and finance, is expected to assess the state of the Korean economy and outline key policy directions at the hearing.
The Korea Exchange this week begins operating an “after-market” session allowing real-time stock trading from 4 p.m. to 8 p.m. By scrapping the existing single-price after-hours system and introducing real-time trading, the exchange is making a full-fledged entry into the “trading after work” market pioneered by alternative trading system Nextrade.
