FOMC Review
2025-05-09
■ The Federal Reserve has kept the policy interest rate unchanged and is not hurrying to cut rates. At the same time, it closely monitors employment and prices.
■ Pay attention to the inflation data released next week to observe whether the correction of the U.S. dollar against the yen since late April has come to an end.
The Federal Reserve (FRB) decided to keep the policy rate unchanged at 4.25% to 4.50% during the Federal Open Market Committee (FOMC) meeting held on May 6-7. This marks the third consecutive meeting with no change to the interest rate. The statement maintained the previous view that "recent data show that economic activity is still expanding at a solid pace." However, it also added that "uncertainty about the economic outlook has further increased" and pointed out that "the risk of rising unemployment and inflation rates has increased."
Fed Chairman Powell noted at a press conference that if large-scale tariffs continue, they may lead to higher inflation and reduced employment, although the relevant impact has not yet been reflected in the data and is expected to appear in the future. He indicated that he would continue to monitor the situation, emphasizing that there is no need to rush to cut rates at present. Nevertheless, he mentioned that once it is confirmed that the labor market has deteriorated significantly, he will consider taking support measures, showing his readiness to cut interest rates.
Regarding the April employment data, non-farm payrolls (NFP) increased by 177,000 from the previous month, reflecting a slower growth rate. Still, the unemployment rate remained at 4.2%, and the average hourly wage rose by 3.8% year-on-year, remaining basically the same as last month, indicating the resilience of the labor market. Although the next FOMC meeting in June will release the Summary of Economic Projections (SEP), interest rate cuts are still not an urgent issue at the moment and are considered less likely.
In the short term, the market will focus on the April Consumer Price Index (CPI) released by the U.S. Department of Labor on the 13th and the May consumer inflation rate data released by the University of Michigan on the 16th. If market expectations for a June rate cut weaken further and shift to a July cut, the U.S. dollar may receive more support. However, in the context of the current monetary tightening policy adjustment, the sustainability of the dollar's rise is weak. The USD/JPY needs to see whether it can break through the May 2 high of 145.92 yen or the 7-day 50-day moving average of 146.51 yen to confirm whether the correction since late April has ended.
■ Pay attention to the inflation data released next week to observe whether the correction of the U.S. dollar against the yen since late April has come to an end.
The Federal Reserve (FRB) decided to keep the policy rate unchanged at 4.25% to 4.50% during the Federal Open Market Committee (FOMC) meeting held on May 6-7. This marks the third consecutive meeting with no change to the interest rate. The statement maintained the previous view that "recent data show that economic activity is still expanding at a solid pace." However, it also added that "uncertainty about the economic outlook has further increased" and pointed out that "the risk of rising unemployment and inflation rates has increased."
Fed Chairman Powell noted at a press conference that if large-scale tariffs continue, they may lead to higher inflation and reduced employment, although the relevant impact has not yet been reflected in the data and is expected to appear in the future. He indicated that he would continue to monitor the situation, emphasizing that there is no need to rush to cut rates at present. Nevertheless, he mentioned that once it is confirmed that the labor market has deteriorated significantly, he will consider taking support measures, showing his readiness to cut interest rates.
Regarding the April employment data, non-farm payrolls (NFP) increased by 177,000 from the previous month, reflecting a slower growth rate. Still, the unemployment rate remained at 4.2%, and the average hourly wage rose by 3.8% year-on-year, remaining basically the same as last month, indicating the resilience of the labor market. Although the next FOMC meeting in June will release the Summary of Economic Projections (SEP), interest rate cuts are still not an urgent issue at the moment and are considered less likely.
In the short term, the market will focus on the April Consumer Price Index (CPI) released by the U.S. Department of Labor on the 13th and the May consumer inflation rate data released by the University of Michigan on the 16th. If market expectations for a June rate cut weaken further and shift to a July cut, the U.S. dollar may receive more support. However, in the context of the current monetary tightening policy adjustment, the sustainability of the dollar's rise is weak. The USD/JPY needs to see whether it can break through the May 2 high of 145.92 yen or the 7-day 50-day moving average of 146.51 yen to confirm whether the correction since late April has ended.