Asian Markets React to US Federal Reserve Rate Cut
Asian and Pacific stock markets exhibited mixed reactions following the US Federal Reserve's decision to cut interest rates by 0.25 percentage points. The Fed's action, which lowered the key interest rate to a corridor of 4.5 to 4.75 percent, aimed to address slowing inflation in the United States. The Tokyo Stock Exchange closed up by 0.3%, while Hong Kong's market faced a decline of 0.7%. Meanwhile, Chinese stock markets experienced selling pressure as investors awaited Beijing's fiscal spending plan to counter future US tariffs, leading to a 0.4% drop in Shanghai and a 0.2% decline in Shenzhen.
Implications of Trump's Return on Economic Policy
The Fed's rate cut comes amid uncertainty surrounding the economic landscape following Donald Trump's presidential victory. With inflation in the US falling to 2.4% in September, the Fed is under pressure to maintain its traditional role of controlling inflation. However, Trump's anticipated policies, including potential tax cuts and high tariffs, may lead to increased inflationary pressures. This situation raises questions about whether the Fed will continue to pursue rate cuts or maintain higher rates to curb inflation.
Future Outlook for the Global Economy
As Asian markets await further developments, the Seoul Stock Exchange saw a slight decline of 0.1%, while Sydney's market rose by 0.8%. European market futures also appeared weak. The Fed's next steps will be closely monitored, especially with Trump's return to the presidency, which may influence monetary policy dynamics. Jerome Powell, the Fed Chairman, is expected to remain in office until 2026, but Trump's history of conflict with the Fed raises concerns about future leadership changes and policy direction.
