Global Markets Await Fed Rate Cut Amid Busy Central Bank Week

Asian markets opened cautiously on Monday as investors brace for a critical week of central bank decisions. The U.S. Federal Reserve is widely expected to cut interest rates by 25 basis points, lowering the funds rate to 4.0–4.25%. Futures markets show nearly 100% certainty of the move, with investors eyeing Fed Chair Jerome Powell’s comments and the “dot plot” projections for clues on further cuts. Markets have already priced in 125 basis points of easing this year, meaning any less dovish outlook could disappoint.

Economists, including Citi’s Andrew Hollenhorst, expect Powell to highlight risks to employment after softer U.S. jobs data. Citi projects reductions at the next five meetings, with median forecasts signaling at least 75 basis points of cuts in 2025. President Donald Trump renewed criticism of Powell over the weekend, accusing him of harming the housing market.

The Bank of Canada is also expected to trim rates by 25 basis points this week, while the Bank of Japan and Bank of England are likely to stay on hold. China may ease one of its lending rates amid ongoing economic sluggishness.

Currency markets were muted, with the euro steady at $1.1727 after Fitch downgraded France. The yen traded at 147.77 per dollar, staying within its recent range. European Central Bank officials, including Christine Lagarde, are scheduled to speak this week, reinforcing a stable EU policy outlook.

In equities, South Korea hit fresh records on AI optimism, while MSCI’s Asia-Pacific index slipped 0.1%. U.S. Treasury yields held at 4.07% after hitting a five-month low last week on weaker labor data. Key U.S. releases include retail sales, industrial output, housing starts, and jobless claims.

Oil prices hovered near $67 for Brent and $62.77 for U.S. crude, while gold traded slightly lower at $3,639, close to record highs.