Tokio Marine Asset Management reviews developments in the global economy during the third week of September, outlining the factors behind the acceleration in U.S. CPI, price trends, and the key points of the policy changes by the Fed and the Bank of Japan.
U.S. core CPI rose 0.3% month on month in August. While price increases in tariff-affected goods had run their course, strong demand for PC-related products, driven by soaring semiconductor memory prices, brought inflationary pressure to the fore. Within core services, rent growth slowed, while education and communication services surged due to revisions to mobile phone charges.
At its September FOMC meeting, the Fed raised the policy rate by 0.25 percentage points, setting the target range for the federal funds rate at 3.75%–4.00%. The hike was unanimous and is viewed as a measure supporting a return to the 2% target.
The Bank of Japan also held a Monetary Policy Meeting on 17 and 18 September and decided to raise its policy rate by 0.25 percentage points, setting the target for the uncollateralized overnight call rate at around 1.25%. The decision reflected concern about the risk of inflation exceeding the 2% target amid soaring crude oil prices and the yen's continued depreciation.
Tokio Marine Asset Management