Bank of Japan raises interest rates again in its July-end meeting on sustained inflationary pressures
Energy prices up 2.1% in July as crude oil edges up
Major global economies showed resilience in the second quarter of 2024, despite a slight moderation in some. The United States and Japan performed better than in the first quarter, while growth moderated for the United Kingdom and China. The euro area, meanwhile, held steady.
That said, volatility and uncertainty increased by the end of July and continued into the first week of August. The Bank of Japan turned hawkish and raised interest rates once again, while weak US payroll data in July sparked fears of a rapidly cooling labour market and an imminent recession, increasing the likelihood of the Federal Reservecutting rates in September.
The combination of these developments led to an unwinding of the global yen carry trade and a rush of outflows from emerging markets to safe-haven assets, with most emerging market currencies (and some developed market ones) depreciating. Heightened geopolitical tensions also added to the global volatility.
