Monetary Policy

UBS analysts predict the Federal Reserve will cut interest rates by 50 basis points by 2026, despite rising energy prices. Fed Chairman Powell suggests limited tightening is needed, focusing on core inflation evidence before cuts. The forecast for Treasury yields indicates potential downward movement.

The Federal Reserve is highly likely to keep interest rates steady in April, with a 99.5% probability. Looking ahead to June, there's a 94.1% chance of maintaining rates, a 0.5% chance of an increase, and a 5.4% chance of a cut.

Gate News message, April 17 — The rate swap market is signaling a dovish shift, with current pricing reflecting expectations for 15 basis points of Federal Reserve rate cuts by December.

On April 17, Hong Kong interbank offered rates (HIBOR) increased across all tenors, with the one-month rate rising to 2.55143% and overnight rates hitting the highest level since January at 3.36536%.

Bank of Japan Governor Kazuo Ueda highlighted the conflict in the Middle East as a source of inflation and economic slowdown risks. He confirmed that the Monetary Policy Committee will determine suitable measures to reach the 2% inflation target at the upcoming meeting.

The CME's Fed Watch tool indicates a 99.5% probability of the Federal Reserve keeping rates unchanged in April, with similar projections for June showing a 98% likelihood of steady rates and minimal chances for rate cuts or hikes.

Federal Reserve Governor Michelle Bowman indicated that, given current conditions, the central bank might reduce interest rates only three times for the rest of the year.

Federal Reserve official John Williams affirmed a steady monetary policy outlook, projecting 2% to 2.5% economic growth and stable unemployment around 4.25% to 4.5%. Inflation is expected to decrease from 2.75% to 3% in 2026 to 2% in 2027.

Bank of England Governor Andrew Bailey said at an IIF event that the effective functioning of stablecoins depends on users’ confidence in full redemption mechanisms, calling for the development of international standards. The United States has meanwhile released the GENIUS Act, requiring stablecoin issuers to meet compliance requirements. In South Korea, Circle’s CEO said there are no plans to launch a won-pegged stablecoin, and that the company is currently watching local legislative debates.

The Australian dollar has reached a 30-year high against the Japanese yen, propelled by optimism over a US-Iran ceasefire and a global equity rally. The RBA's hawkish policy and positive links to equity markets enhance AUD's appeal, though risks remain due to potential volatility.

The central bank released a report stating that Taiwan’s CBDC development will follow a phased promotion strategy. In the short term, it is not urgent to issue retail CBDC; the focus is on wholesale CBDC and the infrastructure for asset tokenization. The central bank emphasized that CBDC will not increase the money supply and will have legal standing. As a rule, merchants may not refuse to accept it, in order to prevent the payment market from becoming overly dependent on the private sector.

U.S. Treasury Secretary Bessent indicated that the Federal Reserve may lower interest rates further, emphasizing that rising oil prices have not impacted inflation expectations, as they remain detached from broader economic price pressures.

Kevin Warsh, nominated by Trump for Federal Reserve chair, is the wealthiest candidate in recent history, with a net worth up to $209 million. His diverse investments include Silicon Valley, fintech, and AI. Despite potential conflicts, he has a modern view on digital assets.

Shin Hyun-song, nominee for Bank of Korea governor, acknowledged the coexistence of CBDCs and stablecoins at a confirmation hearing. He proposed a three-pronged approach for the won's internationalization and pledged to divest foreign assets to prevent conflicts of interest.

Former Treasury Secretary Janet Yellen believes the Federal Reserve may cut interest rates this year, despite uncertainty from the Iran war and oil price volatility. She sees a broad supply shock impacting various sectors but suggests stable inflation expectations make rate hikes unlikely.

Kevin Warsh, nominated for Federal Reserve Chair, reported investments in over 20 digital asset companies. His portfolio includes DeFi platforms, blockchain networks, and Web3 projects. The Senate Banking Committee may advance his nomination, raising potential conflict of interest concerns.

Shin Hyun-song, nominated as Bank of Korea governor, discussed the future coexistence of Korean won stablecoins at a parliamentary hearing. He emphasized plans to enhance the digital currency ecosystem, including Project Hangang Phase 2 and participation in the Agora project for cross-border payments.

U.S. Treasury Secretary Bessent advised the Federal Reserve to observe before cutting rates, expressing confidence in declining core inflation. He mentioned the implementation of a 10% tariff under Section 122, with uncertainty about a potential increase to 15%.

Gate News news: On April 14, the hearing of Fed chair nominee Waller is scheduled for April 21.

Gate News message: On April 14, U.S. Treasury Secretary Bessent said the United States should "wait and see" before cutting interest rates.