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July 31, 2025
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Japan: Policy Rate Held At 0.5% (Consensus 0.5%) in Jul-25

  • The BoJ held rates steady at 0.5% while dramatically raising its fiscal 2025 inflation forecast to 2.7% from 2.2%, exceeding market expectations and signalling potential policy acceleration.
  • The risk assessment shifted from downside-skewed to balanced, the most hawkish change in recent quarters, though Governor Ueda's dovish press conference comments tempered near-term hike expectations.
  • The Japan-U.S. trade deal reduces the increased tariff rate to 15%, materially improving the economic outlook. There is now an increased probability of rate hikes by year-end despite ongoing uncertainties.
July 31, 2025
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Colombia: Hawkish Policy Pivot

  • Colombian rate held at 9.25% contrary to consensus, with the Board prioritising persistent core inflation over growth concerns in a split 4-3 decision.
  • Fiscal deterioration following S&P/Moody's downgrades constrains monetary easing through sovereign risk premium transmission.
  • Robust domestic demand growth of 4.1% and sticky services inflation justify a restrictive stance despite headline disinflation to 4.8%.
July 30, 2025
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US: Policy Rate Held At 4.5% (Consensus 4.5%) in Jul-25

  • The Federal Reserve maintained rates at 4.25%-4.5% in a 9-2 decision, with Governors Bowman and Waller dissenting in favour of a 25bp cut—marking the first double dissent by Board members since 1993 amid deepening divisions over the appropriate timing for policy easing.
  • The Committee downgraded its growth assessment while acknowledging that inflation remains "somewhat elevated". Chair Powell emphasised no decisions have been made regarding September rate cuts, maintaining a cautious, data-dependent approach.
  • Future interest rate decisions will hinge on the persistence of tariff-induced inflation, labour market resilience, and the anchoring of inflation expectations, with dissenting governors arguing that transitory tariff effects should not preclude supporting employment through rate cuts
July 30, 2025
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Brazil: Copom Pause Amid US Tariffs

  • Brazil's Copom held Selic at 15% as expected, pausing after seven hikes amid US tariff uncertainty, with policy to remain restrictive for an extended period.
  • Inflation expectations persist above target at 5.1% (2025) and 4.4% (2026), despite a moderation in activity, requiring a prolonged contractionary stance.
  • Rate cuts are unlikely before December 2025, pending sustained disinflation; future hikes remain possible if inflation pressures intensify.

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