米べいFRB 金融きんゆう政策せいさく決定けってい会合かいごうで利下りさげの観測かんそく強つよまる あす未明みめいに発表はっぴょう

The U.S. Federal Reserve Board FRB will hold a meeting to decide monetary policy starting on the 16th, as President Trump repeatedly calls for interest rate cuts, and will announce the results in the early hours of the 18th Japan time.

In the financial markets, there is growing speculation that the Federal Reserve will implement its first interest rate cut under the current Trump administration to support the economy in light of the slowdown in employment.

In the latter part of the article, commentary by analyst Kaori Iida is also included.

The FRB will hold a two-day meeting to decide monetary policy starting on the 16th, and will announce the results at 3 a.m. Japan time on the 18th.

President Trump has repeatedly called on the Federal Reserve to cut interest rates, and if the Fed decides to lower rates, it will be the first time under the current Trump administration and the first in six meetings since last December.

A major agricultural machinery manufacturer headquartered in central Illinois and operating worldwide announced last month that it will lay off a total of 238 employees at three factories.

Many farmers and producers who purchase agricultural machinery are facing difficult situations, and the main reason is that orders are decreasing.

It is reported that this company expects to incur a loss of $600 million, or over 88 billion yen, this year due to tariff measures.

Additionally, in March of this year, companies that sell Christmas trees online and through other channels reduced their workforce by about 10%, cutting more than 360 employees.

This company imports trees and decorations from countries like China and sells them not only to ordinary households but also to hotels and offices.

We significantly increased our inventory before the Trump administrations tariff measures were implemented, but now we are taking a major hit, such as a more than 10% increase in product import costs.

At the company, in addition to freezing employee pay raises and business trips, they thoroughly implemented cost-cutting measures such as discontinuing lunch services. However, they were unable to fully absorb the increase caused by tariffs, and for the first time since their founding in 2006, they decided to carry out large-scale layoffs.

CEO Mack Herman said, The worst day in the past 20 years was having to say goodbye to the people who worked so hard to build this company.

I hope that consumers will have solid confidence from late October to November, when demand peaks ahead of Christmas, he said.

At a car dealership in Salt Lake City in the western United States, cars costing several tens of millions of yen each are being imported from Germany.

Sales up to June this year were 5% higher than the previous year, and in July, despite a nearly 4% price increase on many models due to the Trump administration’s tariff measures, there has reportedly been no impact on sales.

This years sales are expected to exceed last years by 10%, and, backed by strong business performance, construction is underway for a new store with an investment of over 3.5 million dollars, or just over 5 billion yen.

In the United States, personal consumption and corporate capital investment remain strong, and the GDP Gross Domestic Product for this years April to June period increased at an annualized rate of plus 3 percent compared to the previous three months.

The rise in asset prices is behind this steady personal consumption.

Due to expectations of an interest rate cut by the Federal Reserve, stock prices have repeatedly hit record highs this month, and there is also a view that this positive trend is supporting personal consumption.

The store representative said, The stock market continues to grow, and interest rates will likely drop significantly in the near future.

He also said that he is very optimistic about the outlook for the American economy.

Mr. Suzuki, taking into account factors such as the recent significant downward revision of nonfarm payrolls in the U.S. employment statistics, stated that the FRB seems to have suddenly become quite concerned about employment.

We cant just leave things as they are, and we have to take some kind of policy action, he said, indicating that the Fed is likely to cut interest rates at this meeting.

Mr. Suzuki pointed out that how the Fed analyzes the sudden drop in employment figures carries significant weight, indicating that the Feds analysis of the slowdown in employment is important.

On the other hand, regarding the impact on the Japanese economy, it was pointed out that if the FRB were to rapidly lower interest rates, in the financial markets, there would be a heightened awareness that the interest rate gap between Japan and the U.S. would narrow, leading to a stronger yen in the exchange rate.

On top of that, he stated, Industries such as transportation machinery and automobiles are already being affected by the Trump administrations tariff measures, so if the pressure for a stronger yen is added, we will have to worry about the future of Japans economy in a different way than before. He sounded a warning that it is necessary to carefully monitor the impact of the FRBs monetary policy on the Japanese economy through financial markets and other channels.

Some people say its almost certain.

If an interest rate cut is implemented this time, it will be the first in six meetings since last December.

This will also be the first time since President Trump was re-elected.

For this reason, the focus will be on future monetary policy, such as whether interest rates will be cut at the meetings in October and December.

In the first place, since lower interest rates make it easier for both companies and individuals to borrow funds, President Trump wants to boost the economy through interest rate cuts in preparation for next years midterm elections.

On the other hand, there has been ongoing tension with Fed Chair Powell, who has been cautious about lowering interest rates out of concern that inflation might accelerate.

What symbolizes this is this scene from July.

President Trump entered the Federal Reserve headquarters, where building renovations are underway.

Formerly known as the real estate king, Trump looks quite at ease both wearing a helmet and walking around construction sites.

Chairman Powell, who was suddenly pressed to respond, was put under quite blatant pressure, being directly told, We want you to lower interest rates.

President Trump said, I want interest rates to be lowered.

I have nothing else to say, he said.

The FRB cited the impact of Trumps tariffs as a reason for not cutting interest rates.

In other words, it means that prices within the United States are expected to rise.

The Consumer Price Index for August, announced on the 11th, was indeed 2 compared to the same month of the previous year.

At the highest level in seven months, there are views emerging that the effects of the Trump tariffs are gradually spreading.

On the other hand, the employment statistics for August, released on the 5th, made it clear that the labor market is slowing down.

At this stage, this is what we are more concerned about.

Chairman Powell has repeatedly said that he will focus on economic data, and if he decides to cut rates, it will be based solely on economic data.

Here are Mr. Baumann and Mr. Waller.

These two people were appointed by President Trump during his first term.

Afterwards, Director Kugler, who was nominated by former President Biden, resigned before the end of her term, and her successor is a person attracting a lot of attention.

This is Mr. Steven Milan.

Mr. Milan is 42 years old.

He is a close aide to President Trump and currently serves as the Chairman of the Presidents Council of Economic Advisers, which is responsible for analyzing the current state of the American economy and formulating policies.

On the 16th Japan time, it was just approved by the parliament, and this meeting will be the first participation.

In last weeks parliamentary testimony, he emphasized his stance of not simply obeying the president.

Mr. Milan said, The independence of the central bank is important.

For the sake of the American economy and financial markets, The President probably nominated me because he prefers my policies, and If approved by the board, I will make decisions from an independent standpoint, he said.

Milan, the new board member, repeatedly said that he would make decisions from an independent standpoint, but he is already being criticized for threatening the independence of the central bank by taking up the position of FRB board member without resigning from his government post.

If interest rates are determined by the intentions of President Trump—in other words, by political intervention—there are concerns that the economy could become destabilized.

Q5 There’s also some uncertainty surrounding Director Cook, isn’t there?

President Trump announced last month that he would dismiss Director Cook.

There was fraud surrounding housing loans, claims President Trump, and it is believed that he is trying to appoint a pro-Trump board member as a successor.

Currently, the matter is being contested in court, and although Director Cook only decided to attend this meeting at the last minute, President Trump seems to be almost taking over the Federal Reserve.

Q6 Is there any movement regarding the selection of Chairman Powells successor?

It was President Trump who nominated Mr. Powell as chairman in February 2018.

My term as chairperson is until May next year.

On the 5th of this month, he told reporters at the White House that the candidates for the next Fed chair have been narrowed down to a top three.

President Trump said, You could say those three are the top candidates.

Of the two Kevins, I have interviewed Kevin Hassett several times.

When I was a researcher at a conservative think tank in Washington and went to interview about monetary policy, they responded politely, but I’m not sure if they have as strong a belief in independence as Chairman Powell does.

If the central bank succumbs to pressure and lowers interest rates, it may be seen as a political tool, leading to a loss of confidence in the dollar. This could result in people moving away from the dollar, as it would create unpredictable consequences.

Amid growing interest in the independence of the FRB, this meeting is expected to be more tense than ever before.

The statement released after the meeting and the subsequent press conference will draw more attention than usual to what Chairman Powell says not only about the outlook for prices and the economy, but also about the fundamental issue of the Feds independence.