Throughout most of July, the financial markets experienced significant volatility until the Federal Open Market Committee (FOMC) announced a 25-basis-point increase in interest rates on the 25th and 26th of July. This decision came after a pause in rate hikes in June. The announcement came amidst economic data showing a decrease in inflationary pressures, highlighted by the latest Consumer Price Index data revealing a year-over-year increase of 3.0% in June, down from 4.0% in May. Federal Reserve Chair Jerome Powell emphasised the Fed’s commitment to maintaining a 2% inflation target, implying that further rate hikes might be necessary to achieve this goal, contingent on data trends. [i] Hence there are still uncertainties ahead with regards to the rate hike cycle.

Meanwhile, the European Central Bank also raised rates by 25 basis points and hinted at a potential pause in September. [ii]The Bank of Japan adjusted its yield curve control policy, sparking speculation about an eventual shift in its substantial stimulus programme.[iii]

Amidst these developments, China stands as the sole country on a stimulus path. There are positive indications from a recent Politburo meeting, suggesting potential improvements. China’s regulatory environment seems to be easing, and its cyclical weakness is partly attributed to subdued exports, which are now showing signs of bottoming out and may potentially rise in the second half of 2023.[iv]


[i] Fed recap: The Federal Reserve’s July hike and Powell’s market-moving comments (
[ii] ECB rate decision July 2023: raises rates by 25 basis points (
[iii] Bank of Japan (BOJ) to guide yield curve control with greater flexibility (
[iv] Deutsche Bank 25 July 2023 CIO Memo: China Politburo meeting signals more stimulus

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