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Fed maintains rates amid inflation concerns

Federal Reserve Chair Jerome Powell said the central bank's policy remains well-positioned to respond to evolving economic conditions. Stock indices on Wall Street rose following the Fed’s decision to leave rates unchanged, even US President Trump denied relaxing tariffs on Chinese imports. Today, markets are anticipating three more monetary policy decisions from the Bank of England as well as the Swedish and Norwegian central banks. 

  • Date
  • Author Alessandro Fezzi, LGT Research Content & Publications
  • Reading time 5 minutes

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The US central bank announced on Wednesday that it will keep interest rates within the target range of 4.25-4.5%, citing increased risks of higher unemployment and inflation. Fed Chair Powell indicated that the central bank is adopting a "wait and see" approach, emphasising the need for more data before considering rate cuts. Powell also noted that US President Donald Trump's tariffs could delay the Fed's progress towards its economic goals, potentially extending the current rate levels for the next year. 

US stocks rise after Fed comments

Stock indices on the New York stock exchange reacted positively to the Federal Reserve's meeting on Wednesday. Although interest rates remained unchanged, comments from Fed Chair Jerome Powell lifted investor sentiment. The Dow Jones Industrial rose by 0.7% to 41,113.97 points, while the S&P 500 and Nasdaq 100 increased by 0.4%, respectively. Powell highlighted risks from trade policies but indicated no rush to alter interest rates, contributing to market optimism.

Trump pledged to maintain high China tariffs

US President Donald Trump stated on Wednesday that he will not consider reducing the 145% tariffs on Chinese imports to encourage trade negotiations with Beijing. This stance comes ahead of a scheduled meeting between US Treasury Secretary Scott Bessent and his Chinese counterpart in Switzerland to discuss trade and economic issues. Trump’s firm position on tariffs follows China’s opposition to the hikes, highlighting ongoing tensions in US-China trade relations.

Asia-Pacific markets mostly higher after Fed decision

Stock indices in Asia exhibited mixed performance on Thursday following the Federal Reserve's decision to maintain interest rates. Japan's Nikkei 225 increased by 0.3%. South Korea's Kospi rose 0.5%, and Australia's S&P/ASX 200 gained 0.2%. In China, the Hang Seng index gained 0.9%, while the CSI 300 rose about 0.6%.

UK to sign trade deal with US

Britain is poised to become the first country to sign a trade deal with the US following the announcement of "reciprocal" tariffs in April. The New York Times reported on Wednesday that US President Trump indicated a briefing on the deal would occur the next day. While it remains unclear whether a finalised agreement or a framework will be signed, Britain, despite its trade deficit with the US, was spared the higher tariffs but still faces a 10% levy.

Bank of England poised for rate cut

The Bank of England is expected to lower its key interest rate by 25 basis points from 5.5% to 5.25% this afternoon, amid heightened growth concerns and recent weak labour market data. Governor Andrew Bailey has highlighted significant growth risks stemming from US trade policies.

Today, we are awaiting further monetary policy announcements from the Swedish and Norwegian central banks.

European markets fall ahead of Fed decision

Stock markets in Europe closed lower on Wednesday as investors focused on corporate earnings and anticipated the Federal Reserve's monetary policy announcement. The Stoxx 600 index fell by 0.5%, with retail stocks leading the decline, dropping 2.2%. Novo Nordisk shares rose 1.3% after surpassing first-quarter profit expectations, despite cutting its 2025 guidance due to weaker demand for its weight-loss drug "Wegovy". Additionally, US President Donald Trump's announcement of impending tariffs on the pharmaceutical sector added pressure to the market.

Germany's DAX index fell by 0.6% on Wednesday, despite maintaining a strong upward trend in recent weeks. Investors focused on numerous quarterly earnings reports. Fresenius and BMW posted strong results, with Fresenius shares reaching a three-year high. The Swiss stock market closed significantly lower on Wednesday, with the SMI falling 0.1% to 12,113.76 points, pressured by declines in Roche and Novartis.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Swisscom, Infineon, Henkel, Enel, Prysmian, Emerson Electric, Anheuser-Busch, ConocoPhillips, Warner Bros, News Corp, and Toyota Motor.

Economic data in focus: Unemployment rate Switzerland (07:45), industrial production and trade balance Germany (08:00), interest rate decision of the Riksbank (09:30), Norges Bank (10:00) and Bank of England (13:00), USA initial jobless claims (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.